I.D. Systems, Inc. ( IDSY)

Q2 2011 Earnings Call

August 10, 2011 4:45 pm ET


Jeffery Jagid - Chairman and CEO

Ned Mavrommatis - CFO

Darryl Miller - COO


Matthew Hoffman - Cowen

Morris Ajzenman - Griffin Securities

Orin Hirschman - AIGH Investment Partners

Dan Weston - WestCap Management

Mike Wagner - Private Investor



Good day, ladies and gentlemen, and welcome to the I.D. Systems second quarter 2011 conference call. (Operator Instructions) I’d like to turn the call over to your host, Mr. Jeffery Jagid.

Jeffrey Jagid

Thank you. Welcome to I.D. Systems fiscal 2011 second quarter conference call. Thank you for joining us today. I’m Jeffrey Jagid, the Chairman and CEO of I.D. Systems. With me today are Ned Mavrommatis, our CFO; and Darryl Miller, our COO.

I will provide a brief overview of the quarter and then update on our vehicle management business. Ned will detail our financials, and Darryl will update you on our operations and the performance of our AI subsidiary. Then 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 & 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 second quarter of 2011 was encouraging for I.D. Systems. We made progress toward our goals of growing revenue, controlling costs and achieving net profitability by the end of the year. Compared to the second quarter a year ago, revenues were up 39% to $8.3 million, SG&A and R&D expenses decreased 14% and 22% respectively, while gross margins remained strong and stable at 54%, and our GAAP net loss was cut in half.

On a non-GAAP basis, excluding stock-based compensation and depreciation and amortization of intangible assets, our net loss for the second quarter of 2011 was reduced by almost two-thirds compared to the second quarter of 2010.

Our strong revenue growth in the second quarter was driven by increased sales of our wireless industrial vehicle management systems to both new and existing customers, while recurring service contract revenue from Asset Intelligence remained stable and predictable.

Overall, revenue contribution was roughly equal between our vehicle management and transportation asset management businesses. We also had a relatively balanced mix of product and service revenue.

In our vehicle management business, our channel partners continued to make significant revenue contributions during the quarter, which is one of the keys to our growth. Our strategy of offering multiple tiers of vehicle management solutions also continued to be successful in the second quarter with customers often expressing initial interest in our simplified remotely-hosted subscription-based PowerBox system, then ultimately upgrading to our full feature, full service PowerFleet system.

Having more flexible options in functionality, support requirements, pricing and financing has helped increase the number of deals we win, resulting in an expanding customer base.

Further, roughly 150 organizations have deployed our technology at well over 500 sites. Including our transportation asset management business, we now have close to 600 customers at roughly 2,000 deployment sites. Our expanding growth result in more diversified sources of revenue for I.D. Systems, which is also one of our primary strategic goals.

As a testament to the ongoing value that our wireless technology provides to our existing customers, we continued to generate repeat business from core customers like Alcoa, American Airlines, Ford, Kellogg, Nestle, Procter & Gamble and Wal-Mart.

Ford Motor Company is worth special note, as it commenced a major upgrade to our technology on its material handling equipment across 38 manufacturing plants in North America. As part of this upgrade, we will implement our latest generation of hardware and software, including expanded on-vehicle memory for data processing, enhanced functionality for vehicle control and new capabilities for managing and analyzing the performance of vehicle batteries and battery-charging systems.

We also won our share of new customers in the second quarter of 2011. A Fortune 100 retailer, a Fortune 100 manufacturer, an S&P 500 consumer products producer, and one of the world's largest specialty apparel retailers, among others, all ordered I.D. Systems' hosted subscription-based PowerBox vehicle management system in the second quarter.

Another Fortune 100 retailer ordered our PowerFleet system for its lift truck fleet in multiple distribution centers following a successful pilot implementation. This order was facilitated by the Raymond Corporation, which between its lift truck dealer network and national account sales team has proven to be a very effective channel marketing partner for us.

We won a number of other new PowerFleet customers during the quarter as well which are deploying our technology for the first time at initial sites.

In the airport vehicle vertical market, we continued to expand our system deployment with American Airlines and American Eagle Airlines at the several major U.S. airports during the second quarter.

We're also exploring new opportunities with strategic marketing partners as well as through our SafeNav product on an on-vehicle Runway Incursion Avoidance System powered by Garmin GPS location mapping technology.

In the overall industrial vehicle management space, I.D. Systems continues to hold a dominant market share and win a majority of the opportunities when up against direct competitors. Although precise market share data is hard to verify, because most of our direct competitors are small private companies and our larger competitors do not breakout their relatively small vehicle management sales numbers, we estimate that more than 50% of installed wireless industrial truck management systems are from I.D. Systems.

Read the rest of this transcript for free on seekingalpha.com

If you liked this article you might like

Insider Trading Alert - KRO, CDR And IDSY Traded By Insiders

Insider Trading Alert - KRO, CDR And IDSY Traded By Insiders

I.D. Systems (IDSY) Downgraded From Hold to Sell

I.D. Systems (IDSY) Downgraded From Hold to Sell

I D Systems (IDSY) Upgraded From Sell to Hold

I D Systems (IDSY) Upgraded From Sell to Hold

3 Stocks Pushing The Telecommunications Industry Lower

3 Stocks Pushing The Telecommunications Industry Lower

3 Stocks Pushing The Telecommunications Industry Lower

3 Stocks Pushing The Telecommunications Industry Lower