I.D. Systems CEO Discusses Q1 2011 Results - Earnings Call Transcript

I.D. Systems, Inc. ( IDSY)

Q1 2011 Earnings Call

May 9, 2011 4:45 pm ET


Jeffrey M. Jagid – Chairman of the Board, Chief Executive Officer, and Director

Ned Mavrommatis – Chief Financial Officer

Darryl Miller – Chief Operating Officer

Kenneth S. Ehrman – President


Matthew Hoffman – Cowen & Co.

Walter Schenker – MAZ Partners

George Melas – MKH Management



Good day, ladies and gentlemen. Welcome to the I.D. Systems Inc., Q1 2011 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 call is being recorded.

I’d now like to turn the conference over to Jeffery Jagid. You may begin.

Jeffrey Jagid

Thank you. Welcome to I.D. Systems fiscal 2011 first quarter conference all. Thank you for joining us today. I’m Jeffrey Jagid, the Chairman and CEO of I.D. Systems. With me are Ned Mavrommatis, our CFO; Darryl Miller, our Chief Operating Officer; and Ken Ehrman, the President of I.D. Systems.

I will provide a brief overview of the quarter, Ned will detail our financials, Darryl will update you on our operations and the performance of our Asset Intelligence subsidiary, and Ken will discuss additional highlights. 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.

The momentum we built in the second half of 2010 continued into the first quarter of 2011. Revenues for the first quarter grew to $7.8 million, a 28% increase over the first quarter of 2010 and an 8% sequential increase over the fourth quarter of 2010.

In addition to a solid foundation of recurring service contract revenue from our Asset Intelligence business, we saw sales of our core wireless industrial vehicle management systems increase during the fist quarter as improving conditions in the supply chain technology market reflected the overall global economic turnaround.

Our customers continued to drive significant benefit from our wireless solutions. During the first quarter, we received orders from existing customers for both system expansions and long-term maintenance renewals.

We also won new customers during the quarter particularly though our lift-truck dealer channel partners, which we see as a positive indication that industrial vehicle management is increasingly considered a best practice in corporate supply chains. Our strategy of introducing a simplified version of our vehicle management system, which we call PowerBox, seems to be paying off.

This system provides customers with a highly defined set of core vehicle management functions making its value proposition easy to understand. It is packaged as a relatively low cost subscription service making it easier for customers to acquire and quicker to generate positive cash flow and return on investment.

PowerBox is also extensively pre-configured and being mostly hosted by I.D. Systems, so it’s easy to implement without costly services. It essentially works out of the box which as far we know is unique among industrial vehicle management systems.

In addition to helping us win new customers, we may not have otherwise, the introduction of PowerBox has served as a catalyst for sales of our full-featured PowerFleet vehicle management system. Some customers initially focused on the core functions and competitive pricing of PowerBox, but after analyzing the cost benefit proposition of all of our offerings they end up upgrading to the more flexible option-rich PowerFleet solution.

We are executing on other aspects of our growth strategy as well. We are sustaining a healthy gross profit margin, continuing to control operating costs and maintaining a strong balance sheet, with no debt.

Excluding stock-based compensation and depreciation and amortization of intangible assets, our non-GAAP net loss for the first quarter of 2011 improved to $852,000 compared to a non-GAAP net loss of $3.2 million for the first quarter a year ago. We’re encouraged by our first quarter results and the direction of our business. We remain on track to achieve our primary goals, the preeminent position in the field of wireless asset management and net profitability in 2011.

Thank you for you time this afternoon. I look forward to your questions later on the call. Now, let me turn it over to our CFO, Ned Mavrommatis, to detail our financial results.

Ned Mavrommatis

Thank you, Jeff, and hello to everyone on the call today. The company’s financial results continued to improve in the first quarter of 2011. The first quarter of 2011 is the third quarter in a row where the company had sequential revenue growth.

Revenue for the first quarter was $7.8 million, approximately 28% higher than the prior year first quarter revenue of $6.1 million and 8% higher than the fourth quarter revenue of $7.2 million.

Recurring service contract revenue for the quarter was $3.5 million or 45% of the overall first quarter revenue. As of March 31, we had approximately $29 million of revenue backlog to be recognized over the next few years.

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