SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 1, 2018
I.D. SYSTEMS, INC.
(Exact Name of Registrant as Specified in its Charter)
|(State or Other Jurisdiction||(Commission||(IRS Employer|
|of Incorporation)||File Number)||Identification No.)|
|123 Tice Boulevard, Woodcliff Lake, New Jersey||07677|
|(Address of Principal Executive Offices)||(Zip Code)|
Registrant’s telephone number, including area code (201) 996-9000
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
|[ ]||Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)|
|[ ]||Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)|
|[ ]||Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))|
|[ ]||Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))|
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 2.02. Results of Operations and Financial Condition.
On March 1, 2018, I.D. Systems, Inc. (the “Registrant”) issued a press release regarding financial results for the fiscal quarter and fiscal year ended December 31, 2017. A copy of the press release is being furnished as Exhibit 99.1 to this report.
The information in this report is being furnished pursuant to Item 2.02 of Form 8-K. In accordance with General Instruction B.2. of Form 8-K, the information in this report, including Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as may be expressly set forth by specific reference in such a filing.
This report, including Exhibit 99.1 furnished herewith, contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements typically are identified by use of terms such as “may,” “will,” “should,” “plan,” “expect,” “anticipate,” “estimate” and similar words, and the opposites of such words, although some forward-looking statements are expressed differently. Forward-looking statements involve known and unknown risks and uncertainties that exist in the Registrant’s operations and business environment, which may be beyond the Registrant’s control, and which may cause actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. For example, forward-looking statements include, without limitation: statements regarding prospects for additional customers; market forecasts; projections of earnings, revenues, synergies, potential contract values, accretion or other financial information; emerging new products; and plans, strategies, objectives and initiatives of management for future operations. The risks and uncertainties referred to above include, but are not limited to, future economic and business conditions, the loss of key customers or reduction in the purchase of products by any such customers, the failure of the market for the Registrant’s products to continue to develop, the inability to protect the Registrant’s intellectual property, the inability to manage growth, the effects of competition from a variety of local, regional, national and other providers of wireless solutions, and other risks detailed from time to time in the Registrant’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2016. These risks could cause actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Registrant. Forward-looking statements represent the judgment of management of the Registrant regarding future events. Although the Registrant believes that the expectations reflected in such forward-looking statements are reasonable at the time that they are made, the Registrant can give no assurance that such expectations will prove to be correct. Unless otherwise required by applicable law, the Registrant assumes no obligation to update any forward-looking statements, and expressly disclaims any obligation to do so, whether as a result of new information, future events or otherwise.
Item 9.01. Financial Statements and Exhibits.
As described above, the following exhibit is furnished as part of this report:
|Exhibit 99.1 – Press release, dated March 1, 2018.|
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|I.D. SYSTEMS, INC.|
|By:||/s/ Ned Mavrommatis|
|Title:||Chief Financial Officer|
Date: March 1, 2018
|99.1||Press release, dated March 1, 2018.|
I.D. Systems Reports Fourth Quarter and Full Year 2017 Results
Quarterly Revenue Up 21% to $11.2 Million; Annual Revenue Up 11% to $41.0 Million
Woodcliff Lake, NJ — March 1, 2018 — I.D. Systems, Inc. (NASDAQ: IDSY), a leading provider of enterprise asset management technology, reported results for the fourth quarter and full year ended December 31, 2017.
“The fourth quarter represented a continuation of strong growth and operational momentum achieved over the last several quarters,” said I.D. Systems CEO Chris Wolfe. “More specifically, we achieved our third consecutive quarter of topline growth, improved profitability, as well as operating cash flow generation, which improved to $3.9 million in 2017. In fact, the company has been profitable on a non-GAAP earnings basis for the last three quarters.
“Operationally, we strengthened our core business and diversified our offerings in the market. In our Industrial Truck division, we saw growth in OEM and independent dealer channel sales, in addition to expanding business with strategic enterprise accounts. Also, we completed system development and production readiness of our solution with Avis Budget Group. We are working to deploy the first 50,000 systems this year, which is in line with the initial phase of their stated plan to have a fully connected fleet by 2020.
“Integration of Keytroller, which we acquired in August 2017 and is now part of our Industrial Truck division, is progressing ahead of plan, having already produced meaningful sales and product synergies. Our combined product strategy includes a new product being introduced this summer that is specifically designed for the mid- to smaller-site market. This new product’s features, pricing and ease of implementation will gain access to a new untapped market of more than five million industrial trucks worldwide. Our significant operational progress in 2017, combined with our strong balance sheet of $16.9 million in cash and investments and no debt, has established a solid foundation for us to leverage going forward.”
Fourth Quarter 2017 Financial Results
Revenue increased 21% to $11.2 million from $9.2 million in same year-ago period. The increase was primarily due to higher Rental Fleet revenue and Industrial Truck revenue.
Recurring revenue increased by 2% to $4.5 million from $4.4 million in the same period a year ago.
Gross margin increased to 50.2% from 47.4% in the same period a year ago.
Selling, general and administrative expenses were $5.9 million, compared to $5.3 million in the same year-ago period. The increase was due to the inclusion of expenses from Keytroller in the fourth quarter of 2017, which were absent in the same period a year ago.
Research and development expenses were $0.9 million, compared to $1.1 million in the same year-ago quarter.
Excluding stock-based compensation, depreciation and amortization, foreign currency translation losses, and acquisition-related expenses, non-GAAP net income totaled $200,000 or $0.01 per basic and diluted share, an improvement from non-GAAP net loss of $832,000 or $(0.06) per basic and diluted share in the same year-ago quarter.
Net loss totaled $874,000 or $(0.05) per basic and diluted share, an improvement from a net loss of $2.1 million or $(0.16) per basic and diluted share in the same year-ago quarter.
At quarter-end, the company had $16.9 million in cash, cash equivalents and marketable securities, compared with net cash of $3.9 million in the same year-ago quarter.
Full Year 2017 Financial Results
Revenue increased 11% to $41.0 million in 2017 compared to $36.8 million in the same year-ago period. The increase was primarily due to higher Rental Fleet revenue and Industrial Truck revenue.
Recurring revenue increased 4% to $18.8 million from $18.0 million in the same period a year ago.
Gross margin improved to 51.1% from 49.7% in the prior year.
Selling, general and administrative expenses increased 5% to $21.1 million in 2017 from $20.1 million in 2016, principally driven by higher expenses related to the Keytroller acquisition.
Research and development expenses decreased 13% to $4.0 million in 2017 from $4.5 million in same year-ago period.
Excluding stock-based compensation, depreciation and amortization, foreign currency translation losses, and non-recurring items, non-GAAP net loss totaled $356,000 or $(0.02) per basic and diluted share, an improvement from a non-GAAP net loss of $2.9 million or $(0.22) per basic and diluted share in the same year-ago period.
Net loss totaled $3.9 million or $(0.26) per basic and diluted share, an improvement from a net loss of $6.4 million or $(0.49) per basic and diluted share in the same year-ago period.
Net cash provided by operations was $3.9 million, an improvement from net cash used in operations of $2.5 million in 2016.
Investor Conference Call
I.D. Systems management will discuss the results of the company’s operations and business outlook on a conference call today (Thursday, March 1, 2018) at 4:45 p.m. Eastern time (1:45 p.m. Pacific time).
Company CEO Chris Wolfe and CFO Ned Mavrommatis will host the call, followed by a question and answer session where financial analysts and major institutional shareholders can ask questions.
U.S. dial-in: (877) 307-1379
International dial-in: (443) 877-4066
Conference ID: 1686315
The conference call will be broadcast simultaneously and available for replay in the investor section of the company’s website at www.id-systems.com.
If you have any difficulty connecting with the conference call, please contact I.D. Systems’ investor relations team at (949) 574-3860.
To supplement its financial statements presented in accordance with Generally Accepted Accounting Principles (GAAP), I.D. Systems provides certain non-GAAP measures of financial performance. These non-GAAP measures include non-GAAP net income/loss and non-GAAP net income/loss per basic and diluted share. Reference to these non-GAAP measures should be considered in addition to results prepared under current accounting standards, but are not a substitute for, or superior to, GAAP results. These non-GAAP measures are provided to enhance investors’ overall understanding of I.D. Systems’ current financial performance. Specifically, I.D. Systems believes the non-GAAP measures provide useful information to both management and investors by excluding certain expenses, gains and losses that may not be indicative of its core operating results and business outlook. Because I.D. Systems’ method for calculating the non-GAAP measures may differ from other companies’ methods, the non-GAAP measures may not be comparable to similarly titled measures reported by other companies. Reconciliation of all non-GAAP measures included in this press release to the nearest GAAP measures can be found in the financial tables included in this press release.
About I.D. Systems
Headquartered in Woodcliff Lake, New Jersey, with subsidiaries in Texas, Florida, Germany, and the United Kingdom, I.D. Systems is a leading global provider of wireless M2M solutions for securing, controlling, tracking, and managing high-value enterprise assets, including rental cars, industrial vehicles, trailers, containers, and cargo. The Company’s patented technologies address the needs of organizations to monitor and analyze their assets to increase efficiency and productivity, reduce costs, and improve profitability. For more information, please visit www.id-systems.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward looking statements within the meaning of federal securities laws. Forward-looking statements include statements with respect to I.D. Systems’ beliefs, plans, goals, objectives, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond I.D. Systems’ control, and which may cause its actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. For example, forward-looking statements include statements regarding: prospects for additional customers; potential contract values; market forecasts; projections of earnings, revenues, synergies, accretion or other financial information; emerging new products; and plans, strategies and objectives of management for future operations, including growing revenue, controlling operating costs, increasing production volumes, and expanding business with core customers. The risks and uncertainties referred to above include, but are not limited to, future economic and business conditions, the loss of key customers or reduction in the purchase of products by any such customers, the failure of the market for I.D. Systems’ products to continue to develop, the possibility that I.D. Systems may not be able to integrate successfully the business, operations and employees of acquired businesses, the inability to protect I.D. Systems’ intellectual property, the inability to manage growth, the effects of competition from a variety of local, regional, national and other providers of wireless solutions, and other risks detailed from time to time in I.D. Systems’ filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2016. These risks could cause actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, I.D. Systems. Unless otherwise required by applicable law, I.D. Systems assumes no obligation to update the information contained in this press release, and expressly disclaims any obligation to do so, whether as a result of new information, future events or otherwise.
I.D. Systems Contact
Ned Mavrommatis, CFO
Liolios Group, Inc.
I.D. Systems, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations Data
|Three Months Ended |
|Year Ended |
|Cost of revenue:|
|Cost of products||3,690,000||3,736,000||14,036,000||13,453,000|
|Cost of services||1,167,000||1,822,000||4,492,000||6,578,000|
|Selling, general and administrative expenses||5,337,000||5,869,000||20,126,000||21,053,000|
|Research and development expenses||1,116,000||915,000||4,536,000||3,965,000|
|Loss from operations||(2,084,000||)||(1,175,000||)||(6,368,000||)||(4,091,000||)|
|Net loss before income taxes||(2,083,000||)||(1,185,000||)||(6,370,000||)||(4,181,000||)|
|Income tax benefit – sale of NJ R&D tax credits||-||311,000||-||311,000|
|Net loss per share - basic and diluted||$||(0.16||)||$||(0.05||)||$||(0.49||)||$||(0.26||)|
|Weighted average common shares outstanding - basic and diluted||13,097,000||16,890,000||12,984,000||14,961,000|
I.D. Systems, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Measures
|Three Months Ended |
|Year Ended |
|Net loss attributable to common stockholders||$||(2,083,000||)||$||(874,000||)||$||(6,370,000||)||$||(3,870,000||)|
|Depreciation and amortization||163,000||390,000||685,000||1,132,000|
|Foreign currency translation losses||273,000||(50,000||)||437,000||(456,000||)|
|Acquisition related fees||-||150,000||-||401,000|
|Non-GAAP (loss) income||$||(832,000||)||$||200,000||$||(2,899,000||)||$||(356,000||)|
|Non-GAAP net (loss) income per share - basic and diluted||$||(0.06||)||$||0.01||$||(0.22||)||$||(0.02||)|
I.D. Systems, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet Data
|As of December 31,|
|Cash and cash equivalents||$||4,972,000||$||5,097,000|
|Investments - short term||115,000||1,201,000|
|Accounts receivable, net||9,585,000||8,746,000|
|Financing receivables - current, net||1,766,000||1,295,000|
|Deferred costs - current||3,750,000||4,296,000|
|Prepaid expenses and other current assets||3,495,000||3,627,000|
|Total current assets||27,908,000||29,154,000|
|Investments - long term||1,499,000||10,278,000|
|Financing receivables - less current portion||2,430,000||1,557,000|
|Deferred costs - less current portion||6,638,000||4,302,000|
|Fixed assets, net||3,075,000||2,747,000|
|Intangible assets, net||706,000||5,417,000|
|Accounts payable and accrued expenses||7,622,000||7,440,000|
|Deferred revenue - current||7,197,000||9,711,000|
|Acquisition related contingent consideration - current||-||1,923,000|
|Total current liabilities||17,812,000||19,074,000|
|Deferred revenue - less current portion||10,066,000||7,738,000|
|Acquisition related contingent consideration - less current portion||-||854,000|
|Additional paid-in capital||111,844,000||133,569,000|
|Accumulated other comprehensive loss||(103,000||)||(578,000||)|
|Total stockholders’ equity||16,002,000||32,971,000|
|Total liabilities and stockholders’ equity||$||44,246,000||$||60,932,000|
I.D. Systems, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flow Data
|Year Ended December 31,|
|Cash flows from operating activities:|
|Adjustments to reconcile net loss to cash provided by (used in) operating activities:|
|Stock based compensation expense||1,658,000||2,437,000|
|Depreciation and amortization||685,000||1,132,000|
|Bad debt expense||117,000||115,000|
|Other non-cash items||2,000||(69,000||)|
|Prepaid expenses and other assets||(1,120,000||)||(138,000||)|
|Accounts payable and accrued expenses||(1,874,000||)||(1,099,000||)|
|Net cash (used in) provided by operating activities||(2,484,000||)||3,918,000|
|Cash flows from investing activities:|
|Purchases of investments||(956,000||)||(11,083,000||)|
|Proceeds from the sale and maturities of investments||932,000||1,113,000|
|Net cash used in investing activities||(529,000||)||(17,729,000||)|
|Cash flows from financing activities:|
|Proceeds from underwritten public offering||-||16,065,000|
|Borrowings under revolving credit facility||14,650,000||11,655,000|
|Repayments under revolving credit facility||(11,657,000||)||(14,648,000||)|
|Proceeds from exercise of stock options||70,000||1,277,000|
|Principal payments of capital lease obligation||-||-|
|Net cash provided by financing activities||3,063,000||14,349,000|
|Effect of foreign exchange rate changes on cash and cash equivalents||433,000||(413,000||)|
|Net increase in cash and cash equivalents||483,000||125,000|
|Cash and cash equivalents - beginning of period||4,489,000||4,972,000|
|Cash and cash equivalents - end of period||$||4,972,000||$||5,097,000|