PowerFleet, Inc.

Good morning. Welcome to PowerFleet's first quarter 2022 conference call. Joining us for today's presentation is the company's CEO, Steve Towe, and CFO, Ned Mavramadis. Following their remarks, we will open up the call for questions. Before we begin the call, I would like to provide PowerFleet's safe harbor statement that includes questions regarding forward-looking statements made during this call. During the call, there will be forward-looking statements made regarding future events, including Power Fleet'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 but are not limited to the company's financial expectations for 2022 and beyond. All such forward-looking statements imply the presence of risks and 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 Power Fleet's CEO, Mr. Steve Towe. Sir, please proceed.

Welcome, everyone, and thanks for joining our call. During the first quarter, we built on the solid uplift in revenue from the prior quarter and delivered an encouraging 14% year-over-year revenue growth. The double-digit growth momentum we generated in the first quarter was driven by further commitment from some of our major customers, including Walmart, Albertsons, and American Intermodal Management. And more broadly, we saw growth across our core international verticals and markets, particularly in Mexico and our pointer operations. both of which are realizing solid growth with new and existing partners. It's been a little over four months now since I joined PowerFleet, and my experience and interactions continue to exceed my expectations. The company has solid technology, a strong reputation, a world-class customer base, and a committed global team. Our updated strategy has been very well received by customers, partners, and employees alike. Additionally, our team and key partners are excited about the direction of the business and the increasing role PowerFleet is playing across our customer supply chain to solve the unparalleled need for high visibility and insight through unifying their operations. Before I discuss our growth strategy, operational initiatives and business outlook, I would like to thank Ned for his valuable contributions he has made to PowerFleet over the years. Ned has been a great business partner since I joined the company, and I greatly appreciate his support as we search for our next financial leader to help us build on the operation of financial momentum and capitalize on the growth opportunities on the horizon. On behalf of the board and leadership team, I wish Ned great success in his next endeavor. In the interim, our global controller, Joaquin Fong, will manage the day-to-day global finance operations until the CFO search is completed. And with that, I'll turn to Ned to cover our financial results for the first quarter of 2022. Ned?

Thank you for the kind words, Steve. I look forward to supporting the company not only in a consulting capacity over the coming months, but also as a shareholder and a friend of the PowerFleet family for the years ahead. Turning to our financial results for the first quarter ended March 31, 2022, total revenue increased 14% to $33.2 million from $29 million in the same year-ago period. High margin recurring and services revenue was $18.8 million or 57% of total revenue. This was an improvement on a dollar basis compared to $17.6 million or 61% of total revenue in Q1 of last year. Product revenue, which drives future services revenue, was $14.4 million or 43% of total revenue. This compares to $11.4 million or 39% of total revenue in Q1 of 2021. 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. Services gross profit was $12 million or 64% of total service revenue and improvement compared to $11.2 million or 64% of total service revenue in Q1 of last year. 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. Product gross profit was negatively impacted in Q1 2022 by product mix higher costs associated with supply chain issues and electronic component shortages and inflation. During Q1 of 2022, we incurred approximately $1.3 million in purchase price variance or PPV related to supply chain issues and electronic component shortages, which impacted our product gross profit by 9%. Looking at our expenses, total operating expenses were $18.1 million, down from $18.9 million in the prior quarter, but up from $16.4 million in Q1 of last year. A key initiative of our transformation strategy is to rationalize costs in non-core areas, the benefit of which we expect to see starting in Q2. Looking at our profitability metrics, gap net loss attributable to common stockholder totaled $4.1 million, or 12 cents per basic and diluted share, This compares to gap net loss attributable to common stockholders of $3 million, or $0.09 per basic and diluted share in Q1 of last year. Non-gap net loss and non-gap metric total $2.2 million, or $0.06 per basic and diluted share, compared to non-gap net income of $61,000, or $0.00 per basic and diluted share in the same year-ago period. Adjusted EBITDA loss and non-GAAP metric totaled $993,000 compared to adjusted EBITDA of $1.4 million in the same year-ago period. At quarter end, the company had $20.9 million in cash and cash equivalent and $40.5 million of working capital. That concludes my prepared remarks. Steve?