I.D. Systems, Inc. (IDSY)
Q2 2010 Earnings Call Transcript
August 11, 2010 4:45 pm ET
Jeffrey Jagid – Chairman & CEO
Ned Mavrommatis – CFO & Treasurer
Darryl Miller – COO
Ken Ehrman – President
Matthew Hoffman – Cowen
Morris Ajzenman – Griffin Securities
Walter Schenker – Mas Partners [ph]
Previous Statements by IDSY
» I.D. Systems, Inc. Q1 2010 Earnings Call Transcript
» I.D. Systems, Inc. Q4 2009 Earnings Call Transcript
» I.D. Systems, Inc. Q3 2009 Earnings Call Transcript
Good day, ladies and gentlemen, and thank you for standing by. And welcome to the I.D. Systems Incorporated second quarter 2010 conference call. 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 may be recorded. And now, I will turn the program over to Jeffery Jagid. Sir, please go ahead.
Thank you. Welcome to I.D. Systems fiscal 2010 second quarter conference all. Thank you for joining us today. I’m Jeffrey Jagid, the Chairman and CEO of I.D. Systems. With me is Ned Mavrommatis, our CFO. And Darryl Miller and Ken Ehrman, our Chief Operating Officer and President, respectively, are dialed in remotely.
I will provide a brief overview of the quarter. Ned will review our financials results. Darryl will discuss the continued integration of our AI business unit, which we acquired in January of 2010 and Ken will talk about some of the other highlights of the quarter. We will then open the call to your questions.
Before we begin, let me reiterate the Safe Harbor statement under the Private Securities Litigation Reform Act of 1995. The following discussion contains forward-looking statements 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 and 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.
For the second quarter ended June 30
, 2010, I.D. Systems revenues were $6 million, including approximately $1.1 million per month in recurring service contract revenue from our Asset Intelligence business unit. Net loss for the three-month period was $4 million, although our gross margin for the quarter remained strong at 60%.
During the quarter, we continue to consolidate staff and to implement other cost-cutting measures pursuant to our acquisition of the Asset Intelligence business from General Electric in January. Our initiatives have reduced the company’s the Company’s headcount by headcount by approximately 30% and will ultimately lower our consolidated operating expenses by approximately $8 million. We should begin to see the full effect of these measures in the third quarter.
We are also focused on strategies to grow revenues in this persistently difficult economic environment. To that end we continue to maintain our industry leadership by expanding our intellectual property portfolio and developing new products for both I.D. Systems and Asset Intelligence applications.
Darryl and Ken will discuss some of these products as well as detail some of the recent sales successes we’ve had. Among the sales highlights of the second quarter were:
The extension of our contract with Wal-Mart to continue providing our VeriWise over-the-road trailer management systems and services through 2012, which is valued at approximately $10 million over the term.
The extension of our VeriWise trailer management deployment by Knight Transportation, which added more than 1500 additional trailers to our program.
The continued expansion of our AvRamp Wireless Vehicle Management System at Dallas Fort-Worth International Airport, by both American and American Eagle Airlines.
Procter & Gamble’s selection of I.D. Systems as its preferred global supplier of industrial vehicle management systems and concurrently P&G’s first deployment of our PowerFleet Wireless Vehicle Management System in North America.
And finally, the execution of a marketing agreement with The Raymond Corporation, a leading global lift-truck manufacturer under which Raymond will sell our vehicle management solutions through their extensive dealer network.
We remain committed to growing revenues, controlling costs, and maintaining strong gross margins with the goal of making 2010 a year of progress. Thank you for your time today. I look forward to reporting our – to continued reporting on our continuing progress. Now, let me turn the call over to Ned Mavrommatis, our CFO, to review the Company’s financial results.
Thank you, Jeff. And hello to everyone on the call today. As Jeff noted, for the three months ended June 30
, 2010, I.D. Systems revenue was $6 million compared to $2.7 million for the three months ended June 30
, 2009, an increase of 124%. The revenue increases were attributable primarily to the service contracts held by our Asset Intelligence business unit, which as Jeff pointed out, are generating approximately $1.1 million per month in recurring revenue.
Our gross margin for the second quarter of 2010 was 60% compared to 55% for the second quarter of 2009. The increase in gross margins are due to a larger percentage of our revenue coming from service contracts, which have higher margins than product revenue.
Net loss for the quarter was $4 million or $0.36 per basic and diluted share compared to net loss of $2.3 million or $0.21 per basic and diluted share for the second quarter of 2009. Excluding $439,000 in stock-based compensation expenses our non-GAAP net loss for the second quarter of 2010 was $3.6 million or $0.32 per basic and diluted share. Excluding the stock-based compensation expenses, operating expenses for the three months ended June 30, 2010 were $7.4 million. Due to cost management initiatives, including staff consolidations related to the integration following the acquisition of Asset Intelligence, we expect operating expenses in the third quarter to be approximately $6 million.