PowerFleet, Inc.

Good morning and welcome to the Fireside Chat. At this time, all participants are in a listen-only mode and we will open for questions following the presentation. If anyone should require operator assistance during the conference, please press star zero on your phone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, David Wilson, CFO of Power Fleet, Inc. David, the floor is yours.

Good morning, everyone, and welcome to today's fireside chat. My name is David Wilson, CFO of PowerFleet, Inc., and I am joined on today's call by Steve Towe, PowerFleet CEO. I'll begin the call by sharing our safe harbor statement. The information shared on today's call contains forward-looking statements within the meaning of federal securities laws. All statements contained in this presentation that do not relate to matters of historical fact should be considered forward-looking statements. For example, forward-looking statements include, without limitation, statements regarding our preliminary financial results for the three months ended June 30, 2024, and our preliminary pro forma results for the 12 months ended March 31, 2024, and the integration of our mixed telematics businesses and the ability to recognize the anticipated synergies and benefits of our business combination with mixed telematics. These forward-looking statements are based on management's current expectations. These statements are neither promises nor guarantees and are subject to risks. Uncertainties and other factors described from time to time in our periodic filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove to be incorrect, actual results may vary materially from those indicated or anticipated by these forward-looking statements. The forward-looking statements included in this presentation are made only as of the date of this presentation and, unless otherwise required by applicable law, we assume no obligation to update any forward-looking statements and expressly disclaim any obligations to do so, whether as a result of new information, future events, or otherwise. With the forward-looking statements shared, I'll start by briefly addressing the delay in our Q1 fiscal 2025 earnings call and related filings. We received a comment letter from the SEC on July 30th regarding the designation of PowerFleet, Inc. as the accounting acquirer under ASC 805 business combinations in our recent combination with Mixed Telematics Limited. This accounting matter does not directly impact our cash flow. The matter raised by the SEC was carefully reviewed and deliberated on by both PowerFleet and Mixed Telematics in close collaboration with their external advisors during the preparation of the S-4 and other necessary regulatory filings in connection with the transaction. While relative shareholding is a factor in identifying the accounting acquirer, it's important to recognize that ASC 805 outlines several other considerations under U.S. GAAP that must be evaluated. These include, but are not limited to, the composition of the Board of Directors, management control, any control premium paid, and the relative sizes of the two entities involved in the merger. After a comprehensive analysis of all relevant aspects of the transaction, both companies concluded that PowerFleet had gained control over mixed telematics. Consequently, PowerFleet was identified as the accounting acquirer in this transaction. While we are working closely with our auditors and legal advisors to resolve this matter within the month of August, timing is ultimately dependent upon the SEC review process. As a result, this ongoing review will delay our ability to file our transition report on Form 10-KT for the transition period from January 1, 2024 to March 31, 2024, and our Form 10-Q for the fiscal first quarter ended June 30, 2024. Our preliminary results for the June quarter have been prepared with PowerFleet identified as the accounting acquirer. This includes additional amortization expenses related to intangible assets, primarily customer relationships identified during the purchase price allocation, offset in part by reduction in the amortization of capitalized commissions. While we are confident in the rigor of our evaluation process and believe this conclusion aligns with guidelines provided by US GAAP, we understand the importance of the SEC review process and will work closely with them to conclude this matter. I'll now turn the call over to Steve to provide an overview of our first quarter operating and preliminary financial performance. Steve.

Thank you, David, and thank you all for joining us today. I'd like to start by acknowledging that, due to the matters David has discussed, there has been no longer than usual gaps into our last formal earnings call. However, during this time, we've been deeply focused on executing our strategy and driving meaningful results. Our first quarter financial performance is a strong indicator of the progress we've made and very positive momentum we're seeing across the business. Success is clearly evident in the top-line performance where we expect a 10% year-over-year revenue growth on a pro forma basis to approximately $75 million. This growth underscores robust demand for our solutions, particularly driven by the strength of our differentiated in-warehouse safety solutions and the ongoing traction of Unity in North America and growth in our subscriber base, which increased by 11% year over year to 1.95 million. Our preliminary adjusted EBITDA is anticipated to exceed $13.5 million, representing an increase of over 40% compared to the pro forma adjusted EBITDA from the same period last year. This strength reflects excellence in execution as we deliver strong top-line growth while effectively implementing our integration and EBITDA expansion initiatives. It demonstrates operating leverage inherent with our business model and our cost synergy program running ahead of schedule, securing $8.7 million in annualized savings as we exit the quarter. Looking forward to the future, given our strong start to the fiscal year, We are raising full year 2025 revenue guidance to exceed $300 million, up from our prior guidance of approximately $300 million. We are also increasing our adjusted EBITDA guidance to exceed $60 million, which includes an incremental $5 million in secured exit run rate cost synergies, compared to our previous guidance of approximately $60 million. We believe these results reflect the effectiveness of our integration strategy and our ability to drive up top-line growth and operational efficiencies. Before we open the floor to questions, I want to reiterate that the accounting item with the SEC is not reflective of our operational performance. We're working diligently to resolve this matter and we remain confident in the growth and resilience of our business performance. Thank you for your continued support and confidence in Powerfleet. We look forward to discussing these results in more detail on the next earnings call and addressing your questions during the remainder of the session. Now, let's move on to the Q&A session. Operator?