PowerFleet, Inc.

Good morning. Welcome to PowerFleet's third quarter 2020 conference call. Joining us today for today's presentation is the company's CEO, Chris Wolfe, and CFO, Ned Navramadis. Following the remarks, we will open the call for questions. Before we begin the call, I would like to provide PowerFleet's safe harbor statement that includes cautions regarding forward-looking statements made during this call. During the call, there will be forward-looking statements made regarding future events, including PowerFleet's future financial performance All statements other than present and historical facts, which include any statements regarding the company's plans for future operations, anticipated future financial position, anticipated results of operation, business strategy, competitive position, company's expectations regarding opportunities for growth, demand for the company's product offering, and other industry trends are considered forward-looking statements. Such statements include or are not limited to the company's financial expectations for 2020 and beyond. All such forelicking statements imply the presence of risks, uncertainties, and contingencies, many of which are beyond the company's control. The company's actual results, performance, or achievements may differ materially from those projected or assumed in any forelicking statement. Factors that could cause actual results to differ materially could include, amongst others, SEC filings, overall economic and business conditions, demand for the company's products and services, competitive factors, Thank you, Shamali.

Good morning, everyone, and thank you for joining our call today. I hope everyone is staying healthy and doing well during these challenging times. Our global team of employees and partners are healthy and are continuing to drive the business forward while we follow country, state, and local health measures. While the pandemic continues to present challenging headwinds in our various geographies, we've seen business momentum pick up from the lows we saw in Q2. Despite the ongoing challenges, we delivered solid sequential improvements in all of our key financial metrics during Q3. We realized a 7% increase in total revenue, a 6% increase in gross profit, and a 71% increase in adjusted EBITDA. These results, again, demonstrate not only the resiliency of our business and the necessity of our products and services, but also our focus on driving profitable growth. We continue to make very good progress against our strategic initiative of increasing our vertical integration across our product lines. while at the same time judiciously managing costs and realizing efficiencies throughout our organization. Taken together, these measures produced another strong gross margin quarter at 54% and a 4% sequential decrease in OpEx, which drove significant improvements to our bottom line. I will now turn the call over to Ned to discuss our Q3 financial results in more detail. Afterwards, I will discuss our sales and operational progress and outlook. Then we'll open the call up for any questions.

Thank you, Chris, and good morning, everyone. Before I dive into the numbers, it's important to remind you that our financial results for Q3 2020 include consolidated results for both IED Systems and Poynter Tell Location, which were acquired on October 3, 2019. Keep in mind that the comparable year-ago period only includes standalone results from IED Systems, Inc. Now, with those qualifications, let's look at the numbers. Revenue for the third quarter of 2020 increased to $27.6 million from $25.8 million in the prior quarter and from $16.7 million in Q3 last year. High-margin recurring and services revenue was $16.7 million or 60% of total revenue. This was an improvement from $16.4 million or 64% of total revenue in the prior quarter and from 5.8 million or 34% of total revenue in Q3 of last year. Product revenue which drives future services revenue was 10.9 million or 40% of total revenue. This compares to 9.4 million or 37% of total revenue and 11.1 million or 66% of total revenue in Q3 of last year. Gross profit increased to 14.9 million or 54% of total revenue from $14 million or 55% of total revenue in the prior quarter and from $7.6 million or 45% of total revenue in Q3 of last year. Now, turning to our expenses, total operating expenses for the third quarter of 2020 were $14.2 million down from $14.7 million in the prior quarter. The $14.2 million in Q3 was down 4% from the prior quarter and down 19% from Q1 of 2020. We have additional levers to pull in our expenses to further reduce the cost should the situation with the pandemic worsen. Turning to our profitability measures, gap net loss for the third quarter of 2020 totaled $1.7 million or $0.06 per basic and diluted share. This was an improvement from a gap net loss of $3.8 million or $0.13 per basic and diluted share in the prior quarter and a gap net loss of 2.1 million or 12 cents per basic and diluted share in Q3 of last year. Adjusted EBITDA and non-gap metric for Q3 2020 totaled 3.6 million or 13% of total revenue. This was an improvement from adjusted EBITDA of 2.1 million in the prior quarter and adjusted EBITDA of 738,000 in Q3 of last year. The 3.6 million in adjusted EBITDA in Q3 of this year Mark, the highest level of adjusted EBITDA since the acquisition of Poynter, reflecting the leverage in our financial model. Our liquidity position remains strong at quarter end, with $21.1 million in cash and cash equivalents and a working capital position of $31.2 million. Our focus continues to be on working capital management and cash collections. I'm encouraged to report that for the nine months of 2020, we generated 5.3 million of cash from operations, which is an improvement from 4.3 million used in operations in the same period of 2019. In summary, we believe our diversified customer base, predictable high margin recurring revenue, and prudent approach to cash management will help us ensure we successfully navigate this uncertain time. That concludes my prepared remarks. Chris?