I.D. Systems, Inc (IDSY)

I.D. Systems agreement with Avis Budget Group Call

August 23, 2011 10:30 am ET


Jeff Jagid - Chairman, CEO and Director

Ned Mavrommatis - CFO & Treasurer


Matthew Hoffman - Cowen & Co.

Walter Schenker - MAZ Partners


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Good day, ladies and gentlemen, and thank you for standing by. Welcome to the conference call on the I.D. Systems agreement with Avis Budget Group. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder,this conference maybe recorded. I’d like to introduce your host for today Mr. Jeff Jagid, Chief Executive Officer. Sir, please go ahead.

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Jeff Jagid

Thank you and thank you to everyone for taking the time to dial in today and welcome to our conference all on I.D. Systems agreement with Avis Budget Group as announced in our press release yesterday afternoon. I am Jeff Jagid, the Chairman and CEO of I.D. Systems. With me is Ned Mavrommatis I.D. Systems’ CFO.

We are very pleased and excited to talk to you today about this transaction with Avis Budget which we believe is another significant transformational milestone for I.D. Systems as a company. I have some opening remarks and Ned will detail the financial aspects of the agreement. Then we will then open the call for your questions.

Before we continue, let me reiterate the customary Safe Harbor statement. The following discussion contains forward-looking statement that are subject to risks and uncertainties, including, but not limited to, the impact of competitive products, product demand and market acceptance risks, fluctuations in operating results and other risks detailed from time to time in I.D. Systems’ filings with the Securities & Exchange Commission. These risks could cause the company’s actual results for the current fiscal year and beyond to differ materially from those expressed in any forward-looking statements made by or on behalf of the company.

As many of you know, we’ve been engaged with Avis since 1998 in developing the rental fleet management application of our wireless technology. We’ve significantly evolved this technology into a leading edge system, earning two major patents along the way which provides unique vehicle management capabilities in both traditional airport lots and the new virtual lot environments where reservations, vehicle access and billings are executed remotely and automatically via smartphone.

Our technology is the enabling force behind Avis Budget foray into the virtual rental world which Avis launched yesterday under the name Avis on Location. This allows Avis Budget to offer a de-centralized charge-by-the-hour car rental service to its customers without any on lot staff. The service can be deployed quickly wherever demand dictates with as few or as many vehicles as needed. Customers can then self-manage rentals through their smartphones for a more convenient, cost-effective, time-saving experience. Among the many advantages this technology gives Avis Budget over competitors like Zipcar is that you don’t need a subscription to access the service or a special card to access the vehicle. Everything is controlled through a smartphone accessible web interface, our wireless communications technology and our in vehicle intelligent devices which do everything from recording vehicle usage to unlocking and locking the car doors. By many accounts the vehicle car rental space is the fastest growing segment of the car rental industry.

Auto Rental News has estimated that the market will exceed a billion dollars in the next decade. For Avis Budget virtual rentals are especially important for its dedicated corporate business. In fact Avis Budget has already deployed I.D. Systems technology in thousands of vehicles, on the corporate campuses of several of its Fortune 500 customers and the success of those implementations was a major driver behind the agreement we signed yesterday.

Our technology also brings significant value to Avis Budget’s traditional airport rental lots. Our system automates vehicle data collection without human intervention, streamlines billing and has demonstrated through tens of thousands of rental transactions, a substantial positive impact on Avis Budget’s fuel-related revenues.

As reported in our joint press release yesterday afternoon, the agreement between I.D. Systems and Avis Budget includes the following financial and strategic highlights. I.D. Systems received the $14 million purchase order from Avis Budget to deploy our system on 25,000 Avis Budget rental vehicles primarily in the Northeast United States. The agreement also gives Avis Budget an option to expand system deployment across its global fleet.

Avis Budget has a number of significant incentives to exercise this global deployment option as Ned will detail in a moment, including the $4.6 million equity investment in I.D. Systems, warrants to purchase additional shares of I.D. Systems' stock in the future and the prospect of extended, exclusive use of our technology.

On the technical side of the transaction, our system is fully integrated with Avis Budget's existing rental management systems, including the Wizard Reservation System, which enables any and all vehicles equipped with our technology to be utilized in either virtual or traditional airport setting. This gives Avis Budget maximum flexibility in allocating vehicles to meet shifting market demand and it gives Avis Budget customers a seamless experience no matter where they pick up or drop off their vehicle.

I.D. Systems will provide all system hardware, software, maintenance and support services for this program, while Avis Budget is hosting the system in its IT centre using I.D. Systems' software.

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