Exhibit 99.1

 

 

PowerFleet Reports Fourth Quarter and Full Year 2021 Financial Results

 

Q4 2021 Revenue Up 17% Year-over-Year to $34.4 million, Driving Record Full Year Revenue of $126.2 Million

 

Woodcliff Lake, NJ — March 9, 2022 — PowerFleet, Inc. (Nasdaq: PWFL), a global leader of subscription-based wireless solutions that manage enterprise assets for seamless business operations, reported results for the fourth quarter and full year ended December 31, 2021.

 

Fourth Quarter 2021 Financial Highlights

 

  Total revenue was $34.4 million, up 17% year-over-year.
     
  High margin, recurring and services revenue increased 10.5% year-over-year to $19.1 million, or 56% of total revenue.
     
  Strong balance sheet with $26.8 million in cash and cash equivalents and working capital of $43.6 million at quarter-end.

 

Full Year 2021 Financial Highlights

 

  Total revenue was $126.2 million, up 11% year-over-year.
     
  High margin, recurring and services revenue increased 8% to $73.2 million, or 58% of total revenue.

 

Fourth Quarter 2021 and Recent Operational Highlights

 

  Appointed experienced software industry leader Steve Towe as the Company’s new Chief Executive Officer (CEO). Towe replaces Chris Wolfe, who retired from the Company after serving as CEO since December 2016.
     
  Expanded adoption of PowerFleet Telematics Solution with Kautex, a top global automotive supplier.
     
  Selected by Atlas Van Lines, one of the largest household goods movers in the U.S., to upgrade its trailer tracking solution.

 

Management Commentary

 

“The fourth quarter marked a strong finish to 2021, highlighted by 17% year-over-year topline growth and a 11% increase in high margin, recurring and services revenue in the quarter,” said PowerFleet CFO Ned Mavrommatis. “Our robust growth in the quarter was driven by broad-based sales in our domestic market along with continued demand from our international customer base. We ended the year with a solid balance sheet with $26.8 million in cash and cash equivalents and $43.6 million in working capital, providing us with sufficient resources to execute our transformational growth strategy in 2022.”

 

PowerFleet CEO Steve Towe commented: “It has been a busy and productive period since I joined as CEO in January. Over the last two months, we began implementing the initial phase of our long-term strategic roadmap, which is designed to establish PowerFleet as a fully mission critical software provider for the $58 billion global IoT market. The pandemic accelerated our customers’ digital transformations and the need for fully integrated data solutions that unify their business operations and provide full visibility across their supply chains. Our focus in 2022 is to establish 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. Longer term, we expect successful execution against our strategy to translate to international revenue growth and a highly scalable, repeatable, and profitable global organization.”

 

 
 

 

 

Fourth Quarter 2021 Financial Results

 

Total revenue increased 17% to $34.4 million from $29.4 million in the same year-ago period.

 

Services revenue was $19.1 million, or 56% of total revenue, an improvement compared to $17.3 million, or 59% of total revenue, in the same year-ago period. Product revenue, which drives future services revenue, was $15.3 million, or 44% of total revenue, compared to $12.1 million, or 41% of total revenue, in the same year-ago period.

 

Gross profit was $15.4 million, or 45% of total revenue, compared to $15.2 million, or 52% of total revenue, in the same year-ago period. Service gross profit was $12.4 million, or 65% of total service revenue, compared to $11.2 million, or 65% of total service revenue, in the same year-ago period. Product gross profit was $3.1 million, or 20% of total product revenue, compared to $3.9 million, or 32% of total product revenue, in the same year-ago period. Product gross profit was impacted in Q4 2021 by product mix, higher costs associated with supply chain issues and electronic component shortages and inflation.

 

Selling, general and administrative expenses were $16.1 million, compared to $14.0 million in the prior quarter and $12.9 million in the same year-ago period. The increase in selling, general and administrative expenses was primarily due to $1 million of recruiting fees and severance costs related to the prior CEO’s departure. Research and development expenses were $2.8 million, compared to $2.3 million in the same year-ago period.

 

Net loss attributable to common stockholders totaled $7.9 million, or $(0.23) per basic and diluted share (based on 35.0 million weighted average shares outstanding), compared to net loss attributable to common stockholders of $3.5 million, or $(0.12) per basic and diluted share, in the same year-ago period (based on 30.2 million weighted average shares outstanding).

 

Non-GAAP net loss, a non-GAAP metric, totaled $(245,000), or $(0.01) per basic and diluted share (based on 35.1 million weighted average basic and diluted shares outstanding), compared to non-GAAP net income of $2.0 million, or $0.07 per basic and $0.05 diluted share (based on 30.2 million weighted average basic shares outstanding and 38.1 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, a non-GAAP metric, totaled $1.0 million, compared to adjusted EBITDA of $3.2 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 $26.8 million in cash and cash equivalents. The company’s working capital position at quarter-end was $43.6 million.

 

Full Year 2021 Financial Results

 

Total revenue increased 11% to $126.2 million from $113.6 million in the same year-ago period.

 

Services revenue was $73.2 million, or 58% of total revenue, an improvement compared to $67.9 million, or 60% of total revenue, in the same year-ago period. Product revenue, which drives future services revenue, was $53.0 million, or 42% of total revenue, an improvement compared to $45.7 million, or 40% of total revenue, in the same year-ago period.

 

 
 

 

 

Gross profit was $60.2 million, or 48% of total revenue, compared to $59.0 million, or 52% of total revenue, in the same year-ago period. Service gross profit was $46.6 million, or 64% of total service revenue, compared to $43.6 million, or 64% of total service revenue, in the same year-ago period. Product gross profit was $13.5 million, or 26% of total product revenue, compared to $15.4 million, or 34% of total product revenue, in the same year-ago period.

 

Selling, general and administrative expenses were $57.1 million, compared to $51.9 million in the same year-ago period. Research and development expenses were $11.1 million, compared to $10.6 million in the same year-ago period.

 

Net loss attributable to common stockholders totaled $18.2 million, or $(0.52) per basic and diluted share (based on 34.6 million weighted average shares outstanding), compared to net loss attributable to common stockholders of $13.6 million, or $(0.46) per basic and diluted share, in the same year-ago period (based on 29.7 million weighted average shares outstanding).

 

Non-GAAP net income, a non-GAAP metric, totaled $820,000, or $0.02 per basic and $0.02 per diluted share (based on 34.6 million weighted average basic shares outstanding and 42.7 million weighted average diluted shares outstanding), compared to non-GAAP net income of $3.7 million, or $0.12 per basic and $0.10 diluted share (based on 29.7 million weighted average basic shares outstanding and 37.1 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, a non-GAAP metric, totaled $6.2 million, a decrease from adjusted EBITDA of $9.1 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).

 

Investor Conference Call

 

PowerFleet management will discuss these results and business outlook on a conference call today (Wednesday, March 9, 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: 237418

 

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   Year Ended 
   December 31,   December 31, 
   2020   2021   2020   2021 
                 
Net loss attributable to common stockholders  $(3,542,000)  $(7,915,000)  $(13,606,000)  $(18,072,000)
Non-controlling interest   7,000    -    (3,000)   (5,000)
Preferred stock dividend and accretion   1,177,000    1,196,000    4,599,000    4,784,000 
Interest (income) expense, net   291,000    348,000    2,276,000    1,910,000 
Other (income) expense, net   109,000    (2,000)   102,000    (7,000)
Income tax (benefit) expense   (144,000)   1,906,000    1,038,000    2,607,000 
Depreciation and amortization   2,266,000    2,177,000    8,425,000    8,553,000 
Stock-based compensation   1,064,000    1,296,000    4,142,000    4,416,000 
Foreign currency translation   2,014,000    1,054,000    1,989,000    1,043,000 
Severance related expenses   -    954,000    -    954,000 
Impact of the fair value mark-up of acquired inventory   -    -    124,000    - 
                     
Adjusted EBITDA  $3,242,000   $1,014,000   $9,086,000   $6,183,000 

 

 
 

 

 

PowerFleet, Inc. and Subsidiaries

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

(Unaudited)

 

   Three Months Ended   Year Ended 
   December 31,   December 31, 
   2020   2021   2020   2021 
                 
Net loss attributable to common stockholders  $(3,542,000)  $(7,915,000)  $(13,606,000)  $(18,072,000)
Preferred stock dividend and accretion   1,177,000    1,196,000    4,599,000    4,784,000 
Other (income) expense, net   109,000    (2,000)   102,000    (7,000)
Intangible assets amortization expense   1,333,000    1,274,000    5,329,000    5,153,000 
Stock-based compensation   1,064,000    1,296,000    4,142,000    4,416,000 
Foreign currency translation   2,014,000    1,054,000    1,989,000    1,043,000 
Non-cash portion of income tax expense   (149,000)   1,898,000    991,000    2,549,000 
Severance related expenses   -    954,000    -    954,000 
Impact of the fair value mark-up of acquired inventory   -    -    124,000    - 
Non-GAAP net income (loss) attributable to common stockholders  $2,006,000   $(245,000)  $3,670,000   $820,000 
                     
Non-GAAP net income (loss) attributable to common stockholders - basic  $0.07   $(0.01)  $0.12   $0.02 
Non-GAAP net income (loss) attributable to common stockholders - diluted  $0.05   $(0.01)  $0.10   $0.02 
Weighted average common shares outstanding - basic   30,227,000    35,083,000    29,703,000    34,571,000 
Weighted average common shares outstanding - diluted   38,130,000    35,083,000    37,057,000    42,720,000 

 

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, 2020. 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 Media Contact

Maggie Hayes

powerfleet@n6a.com

908-433-3334

 

 
 

 

 

PowerFleet, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations Data

 

   Three Months Ended   Year Ended 
   December 31,   December 31, 
   2020   2021   2020   2021 
       (Unaudited)       (Unaudited) 
Revenue:                
Products  $12,135,000   $15,310,000   $45,651,000   $52,981,000 
Services   17,292,000    19,113,000    67,942,000    73,227,000 
                     
    29,427,000    34,423,000    113,593,000    126,208,000 
Cost of revenue:                    
Cost of products   8,194,000    12,259,000    30,219,000    39,445,000 
Cost of services   6,048,000    6,761,000    24,357,000    26,580,000 
                     
    14,242,000    19,020,000    54,576,000    66,025,000 
                     
Gross Profit   15,185,000    15,403,000    59,017,000    60,183,000 
                     
Operating expenses:                    
Selling, general and administrative expenses   12,973,000    16,112,000    51,878,000    57,100,000 
Research and development expenses   2,308,000    2,799,000    10,597,000    11,058,000 
                     
    15,281,000    18,911,000    62,475,000    68,158,000 
                     
Loss from operations   (96,000)   (3,508,000)   (3,458,000)   (7,975,000)
Interest income   14,000    10,000    55,000    45,000 
Interest expense   (304,000)   (357,000)   (2,330,000)   (1,954,000)
Foreign currency translation of debt   (2,007,000)   (961,000)   (2,137,000)   (810,000)
Other (expense) income, net   (109,000)   3,000    (102,000)   8,000 
                     
Net loss before income taxes   (2,502,000)   (4,813,000)   (7,972,000)   (10,686,000)
                     
Income tax benefit (expense)   144,000    (1,906,000)   (1,038,000)   (2,607,000)
                     
Net loss before non-controlling interest   (2,358,000)   (6,719,000)   (9,010,000)   (13,293,000)
Non-controlling interest   (7,000)   -    3,000    5,000 
                     
Net loss   (2,365,000)   (6,719,000)   (9,007,000)   (13,288,000)
Accretion of preferred stock   (168,000)   (168,000)   (672,000)   (672,000)
Preferred stock dividends   (1,009,000)   (1,028,000)   (3,927,000)   (4,112,000)
                     
Net loss attributable to common stockholders  $(3,542,000)  $(7,915,000)  $(13,606,000)  $(18,072,000)
                     
Net loss per share - basic and diluted  $(0.12)  $(0.23)  $(0.46)  $(0.52)
                     
Weighted average common shares outstanding - basic and diluted   30,227,000    35,083,000    29,703,000    34,571,000 

 

 
 

 

 

PowerFleet, Inc. and Subsidiaries

Condensed Consolidated Balance Sheet Data

 

   As of December 31, 
   2020   2021 
       (Unaudited) 
ASSETS          
Current assets:          
Cash and cash equivalents  $18,127,000   $26,452,000 
Restricted cash   308,000    308,000 
Accounts receivable, net   24,147,000    32,094,000 
Inventory, net   12,873,000    18,243,000 
Deferred costs - current   3,128,000    1,762,000 
Prepaid expenses and other current assets   6,184,000    9,051,000 
Total current assets   64,767,000    87,910,000 
           
Deferred costs - less current portion   2,233,000    249,000 
Fixed assets, net   8,804,000    8,988,000 
Goodwill   83,344,000    83,487,000 
Intangible assets, net   31,276,000    26,122,000 
Right of use asset   9,700,000    9,787,000 
Severance payable fund   4,056,000    4,359,000 
Deferred tax asset   12,269,000    4,262,000 
Other assets   3,115,000    4,703,000 
Total assets  $219,564,000   $229,867,000 
           
LIABILITIES          
Current liabilities:          
Short-term bank debt and current maturities of long-term debt  $5,579,000   $6,114,000 
Accounts payable and accrued expenses   20,225,000    29,015,000 
Deferred revenue - current   7,339,000    6,519,000 
Lease liability - current   2,755,000    2,640,000 
Total current liabilities   35,898,000    44,288,000 
           
Long-term debt, less current maturities   23,179,000    18,110,000 
Deferred revenue - less current portion   6,006,000    4,428,000 
Lease liability - less current portion   7,050,000    7,368,000 
Accrued severance payable   4,714,000    4,887,000 
Deferred tax liability   10,763,000    5,220,000 
Other long-term liabilities   674,000    706,000 
           
Total liabilities   88,284,000    85,007,000 
           
MEZZANINE EQUITY          
Convertible redeemable Preferred stock: Series A   51,992,000    52,663,000 
           
STOCKHOLDERS’ EQUITY   -    - 
Total Powerfleet, Inc. stockholders’ equity   79,213,000    92,111,000 
Non-controlling interest   75,000    86,000 
Total equity   79,288,000    92,197,000 
Total liabilities and stockholders’ equity  $219,564,000   $229,867,000 

 

 
 

 

 

PowerFleet, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flow Data

 

   Year Ended December 31, 
   2020   2021 
       (Unaudited) 
Cash flows from operating activities (net of net assets acquired):          
Net loss  $(9,007,000)  $(13,288,000)
Adjustments to reconcile net loss to cash (used in) provided by operating activities:          
Non-controlling interest   (3,000)   (5,000)
Inventory reserve   260,000    (22,000)
Stock based compensation expense   4,259,000    4,676,000 
Depreciation and amortization   8,425,000    8,553,000 
Right-of-use assets, non-cash lease expense   2,832,000    2,859,000 
Bad debt expense   1,035,000    1,442,000 
Change in contingent consideration   -    - 
Other non-cash items   23,000    305,000 
Deferred taxes   359,000    2,607,000 
Changes in:          
Operating assets and liabilities   665,000    (12,146,000)
           
Net cash (used in) provided by operating activities   8,848,000    (5,019,000)
           
Cash flows from investing activities:          
Proceeds from sale of property and equipment   75,000    - 
Capital expenditures   (3,373,000)   (3,398,000)
Purchases of investments   -    - 
Proceeds from the sale and maturities of investments   -    - 
           
Net cash used in investing activities   (3,298,000)   (3,398,000)
           
Cash flows from financing activities:          
Net proceeds from stock offering   4,041,000    26,867,000 
Payment of preferred stock dividend   -    (4,112,000)
Repayment of convertible note   (5,000,000)   - 
Repayment of long-term debt   (2,858,000)   (5,709,000)
Short-term bank debt, net   (262,000)   (270,000)
Proceeds from exercise of stock options   556,000    229,000 
Purchase of treasury stock upon vesting of restricted stock   (423,000)   (794,000)
           
Net cash (used in) provided by financing activities   (3,946,000)   16,211,000 
           
Effect of foreign exchange rate changes on cash and cash equivalents   128,000    531,000 
Net increase in cash, cash equivalents and restricted cash   1,732,000    8,325,000 
Cash, cash equivalents and restricted cash - beginning of period   16,703,000    18,435,000 
           
Cash, cash equivalents and restricted cash - end of period  $18,435,000   $26,760,000