PowerFleet, Inc.

Good morning. Welcome to PowerFleet's fourth quarter and full year 2020 conference call. Joining us for today's presentation is the company's CEO, Chris Wolf, and CFO, Ned Mavromadis. Following their 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 caution regarding forward-looking statements made during the 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 CPR 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 but are not limited to the company's financial expectations for 2021 and beyond. All such forward-looking 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 forward-looking 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, emergence of new technologies, and the company's cash position. The company does not intend to undertake any duty to update any forward-looking statements to reflect future events or circumstances. Finally, I would like to remind everyone that this call will be made available for replay in the investor relations section of the company's website at www.powerfleet.com. Now, I would like to turn the call over to PowerFleet CEO, Mr. Chris Wolf. Sir, please proceed.

Hey, thank you, Alice. Good morning, everyone, and thank you for joining our call. I hope everyone is staying healthy and doing well during these very unprecedented times. As you saw from our earnings release, the fourth quarter was a solid finish to a very unpredictable and challenging year for companies globally. PowerFleet's focus on driving profitable growth along with continued execution against our strategic initiatives enable us to deliver 7% sequential increase in our top line revenues, a 4% sequential increase in high margin recurring services revenue, and a meaningful improvement to our bottom line. These improving financial metrics demonstrate the leverage of our business model and the ongoing benefits from our cost optimization measures, which together helped produce robust gross margins of $8.8 million in operating cash generation for 2020. From a sales perspective, we finished the year strong with several new customer wins, and we entered 2021 with a solid backlog of installations and a robust prospect pipeline. During Q4, more recently, we secured and announced a number of notable wins, including Panhandle Transportation Group, New Corps Tubular, and McGuire Transportation. These wins contributed to our base of monthly subscription units, which totaled a record 590,000 at the end of Q4. Before I dive into our business segments and outlook, I'll turn the call over to our CFO, Ned Mavramadis, to discuss our results for the fourth quarter and full year of 2020. Ned?

Thank you, Chris, and good morning, everyone. Turning to our results for Q4 and the full year of 2020. Revenue for the fourth quarter of 2020 increased to $29.4 million from $27.6 million in the prior quarter but decreased from $35.1 million in Q4 of last year. The year-over-year decrease in revenue was related to the reduction in product revenue from our last major shipment to Avis in Q4 of 2019 and the impact from COVID-19. Revenue for the full year 2020 increased to $113.6 million from $81.9 million in 2019. High margin recurring and services revenue for the fourth quarter was $17.3 million or 59% of total revenue. This compares to $16.7 million or 60% of total revenue in the prior quarter and $18.7 million or 53% of total revenue in Q4 of last year. For the full year 2020, services revenue was 67.9 million or 60% of total revenue compared to 36.5 million or 45% of total revenue in 2019. Product revenue, which drives future service revenue, was 12.1 million or 41% of total revenue. This compares to 10.9 million or 40% of total revenue in the prior quarter and 16.5 million or 47% of total revenue in Q4 of last year. For the fall year of 2020, product revenue was 45.7 million or 40% of total revenue compared to 45.4 million or 55% of total revenue in 2019. Gross profit increased to 15.2 million or 52% of total revenue from 14.9 million or 54% of total revenue in the prior quarter and $16.6 million or 47% of total revenue in Q4 of last year. For the full year 2020, gross profit increased to $59 million or 52% of total revenue from $38.4 million or 47% of total revenue in 2019. Now, turning to our expenses, total operating expenses for the fourth quarter of 2020 were $15.3 million up from $14.2 million in the prior quarter. The $15.3 million in Q4 was up 7% from the prior quarter, but was down 23% from Q4 of 2019. For the full year, operating expenses were $62.5 million compared to $48.5 million in 2019. Turning to our profitability measures, gap net loss attributable to common stockholders for the fourth quarter of 2019 totaled 3.5 million or 12 cents per basic and diluted share. This compares to a gap net loss of 1.7 million or 6 cents per basic and diluted share in the prior quarter and gap net loss of 5.2 million or 18 cents per basic and diluted share in Q4 of last year. Net loss in the fourth quarter of 2020 included $2 million in non-cash expense related to foreign currency translation of debt outstanding in local currency at our company's Israeli subsidiary. For the full year 2020, GAAP net loss was $13.6 million or $0.46 for basic and diluted share compared to GAAP net loss of $12 million or $0.59 for basic and diluted share in 2019. Net loss for 2020 includes $2.1 million in non-cash expense related to foreign currency translation of debt outstanding in local currency at the company's Israeli subsidiary. Due to this non-cash expense, as well as additional gains and losses that may not be indicative of our core operating results, we introduced non-GAAP net income to supplement our GAAP results. Non-GAAP net income attributable to stockholders for Q4 of 2020 totaled $2 million, or 7 cents per basic, and $0.05 per diluted share. This was an improvement compared to non-GAAP net loss attributable to common stockholders of $606,000 or $0.02 per basic and diluted share in Q4 of last year. For the full year 2020, non-GAAP net income attributable to common stockholders totaled $3.7 million or $0.12 per basic and $0.10 per diluted share which was a significant improvement compared to non-GAAP net loss attributable to common stockholders of $4.7 million or 23 cents per basic and diluted share in 2019. Adjusted EBITDA for Q4 2020 totaled $3.2 million or 11% of total revenue compared to adjusted EBITDA of $3.6 million in the prior quarter and adjusted EBITDA of $2.1 million in Q4 of last year. For the full year of 2020, Adjust Rebidat totaled $9.1 million compared to Adjust Rebidat $3.2 million in 2019. Our liquidity position remained strong at quarter end with $18.1 million in cash and cash equivalents and working capital of $28.9 million. On February 21st, we closed an under-in public offering that generated net proceeds of approximately $27 million. As of today, our cash position exceeds $45 million, giving us ample resources and runway to execute a growth strategy. I'm encouraged to report that for the full year of 2020, we generated $8.8 million in cash from operations, which is a significant improvement from $7.3 million used in operation in the same period in 2019. In summary, we believe our diversified customer base Predictable high margin recurring and services revenue and prudent approach to cash management will help us ensure that we successfully navigate this uncertain times. That concludes my prepared remarks. Chris?