Good afternoon. Welcome to I.D. Systems First Quarter 2019 Conference Call. My name is the Twanda, and I will be your operator for today's call. Joining us for today's presentation is the company's CEO, Chris Wolfe; and CFO Ned Mavrommatis. [Operator Instructions]. Before we begin the call, I would like to provide I.D. Systems safe harbor statement that includes cautions regarding forward-looking statements made during this call. During the call, there will be forward-looking statements made regarding future events, including I.D. Systems' future financial performance. All statements other than present and historical facts, which include any statements regarding the company's plan for future operations, anticipated future financial position, anticipated results of operation, business strategy, competitive position, company's expectations regarding opportunities for growth, demand for the company's product, offering and other industrial trends are considered forward-looking statements. Such statements include, but are not limited to, the company's financial expectations for 2019 and beyond. All such forward-looking statements imply the presence of risks, uncertainties and contingencies may - many of which are beyond the company's control. The company actual result, performance and achievements may differ materially from those projected or assumed in any forward-looking statement. Factors that could cause actual results to differ materially could include amongst others SEC filings, overall economic and business conditions, demand for the company's products and service, competitive factors, emergence of new technologies and the company's cash position. The company does not intend to undertake any duty to update any forward-looking statements to reflect future events or circumstances. Finally, I would like to remind everyone that this call will be made available for replay at the Investor Relations section of the company's website at www.id-systems.com. Now I will like to turn the call over to I.D. Systems CEO, Mr. Chris Wolfe. Sir, please proceed.

Thank you, Twanda. Good afternoon, and thank you for joining us today. After the market closed, we issued our financial results for the first quarter 2019 and a press release, a copy of which is available in the Investors section of our website. Q1 was a momentous and extremely productive period for I.D. Systems, as we completed the tuck-in acquisition of CarrierWeb U.S. and announced our strategic acquisition of Pointer Telocation. I'll talk in more detail about these acquisitions in a bit, but suffice it to say CarrierWeb has already had a positive impact on our business. Pointer will be dramatically - will dramatically transform our business by adding scale, technical capabilities and expanding our market opportunities. Beyond these acquisitions, however, I.D. Systems core business segments continue to perform well in the first quarter. This is especially true for Industrial Truck Management business, which benefited from a multimillion-dollar contract we secure with Jungheinrich, a worldwide distributor of material handling equipment. Our success operationally during Q1 drove another quarter of solid financial results, highlighted by the 18% sequential increase in revenue, 10% sequential increase in recurring revenue and a return to adjusted EBITDA profitability. I now would like to turn the call over to Ned to walk you through our financial performance for the quarter in more detail. Afterwards, I'll provide an update on our three businesses as well as discuss our strategic acquisitions and our outlook. Ned?

Thank you, Chris. And good afternoon, everyone. Turning to our financial results for the first quarter ended March 31, 2019. Revenue for the first quarter increased 18% sequentially to $13.6 million from $11.5 million in the prior quarter, an increase 2% from $13.4 million in Q1 of last year. Product revenue decreased to $7.2 million in the first quarter of 2019 from $9.9 million in Q1 last year. The decrease in product revenue is due to delivery of hardware to Avis in Q1 of 2018 for the initial 50,000 unit order from Avis. The hardware delivers for the new 75,000 unit order from Avis began in Q2 of this year and are expected to begin contributing to revenue in 2 - in Q2 and throughout 2019. During Q1 of 2019, service revenue increased by 82% to $6.4 million from $3.5 million in Q1 of last year. The increase in service revenue is due to the increase in our high margin recurring revenue and additional development service revenue in connection with the new order from Avis. High margin recurring revenue increased 19% to a record $5.5 million from $4.6 million in Q1 of last year. We expect the growth in recurring revenue to continue as every unit we sell comes with a long-term recurring revenue contract. Gross profit for Q1 of 2019 increased 9% to $7 million from $6.5 million in Q1 of last year. As a percentage of total revenue, gross profit for the first quarter of 2019 increased 326 basis points to 51.6% from 48.3% in Q1 of last year. The increase in gross profit and gross margin was due to an increase in high margin recurring revenue. Now turning to our expenses. SG&A expenses for the first quarter of 2019 was $6.1 million compared to $5.5 million in…

Thanks, Ned. I'd like to spend a couple of minutes reviewing the highlights of the 3 business segments, and then spend the balance of my time on our acquisition of Pointer. Starting first with our Industrial Truck Management. During the quarter, we signed a multimillion deal with Jungheinrich. We're thrilled about this strategic partnership, as it provide I.D. Systems with an opportunity to provide sophisticated white-label telemetry equipment to Jungheinrich's customer base. I'm also encouraged to report that we successfully finished white labeling our software-as-a-solution for Jungheinrich, and we're now finalizing the hardware modifications. We expect to ship initial units starting in late Q2 or early Q3. As a reminder, Jungheinrich is the third largest forklift manufacturer in the world. And they sell approximately 125,000 material handling units a year. So we're - so if we execute and deliver, we have an opportunity to greatly expand our business with them. More broadly, in our ITM business, during the first quarter, we experienced solid sales, and our pipeline is the best it's been in 4 years. We're especially pleased with our sales out of Europe. In fact, Europe sales exceed our plan for the first time in the company's history. This achievement was in large part due to our collaboration with Jungheinrich. It was also a busy and productive quarter in our Logistics Visibility business. As I mentioned at the outset of the call, we closed our tuck-in acquisition of CarrierWeb U.S. at the end of January. For those not familiar with CarrierWeb, it is a provider of real-time in-cab workflow driver productivity applications, electronic log-in devices, or ELD, refrigerated command and control and trailer tracking. As part of the transaction, we added more than 70 net new customers, 9,000 net new subscribers, and it's worth repeating because the higher value…

[Operator Instructions]. Our first question comes from Josh Nichols with B. Riley.

Yes. I did want to ask, obviously, the company has a close relationship with Pointer for some time, and it seems to be a good strategic fit. But I was curious, I know that the company is targeting a pretty impressive 25% EBITDA margins on about $200 million of revenue. Given that the combined entity is kind of positioned to already do $150 million and growing, like how long do you think it could be until the company may be able to achieve those targets?

Well, as Chris mentioned before, our goal is double-digit growth. If you assume 15% growth on top of the $150 million, we can see it getting to $200 million within three years.

And then, just quickly. Did you mention - I know, there was some onetime development revenue that came from Avis related to the new 75,000-unit order. Do you have the break-out for that - for how much it was specifically?

Approximately $1.6 million.

And then, good to hear that the Carrier acquisition going well, integration's almost done. I know you said in the two months, you've already had like $2 million of orders...

$1 million.

$1 million, sorry. Could you elaborate a little bit on the expectations for the full year at this point?

Well, right now I mean the pipeline looks full, which is really great. As - and if you think about the NCAP part we've never had, getting a lot of excitement on our refrigerated tracking product as well. Matter of fact, met with some of our larger prospects but also current customers, who have refrigerated parts of their fleet, and they're very excited about that product. So I think, the pipeline looks strong, wouldn't want to give you a number that I can't hit. But yes, I think we're on track to actually have some great wins here in the next few months.

Great. And then last question for me. A little bit more of a technical question. So I know the company has a little bit over, I think, $30 million federal deferred tax assets at least towards the end of 2018. And I just want to know if the acquisition of Pointer is going to trip any type of Section 382 restrictions? Or how should we be thinking about the company on a go-forward basis, since it's going to be moving to profitability?

Yes. So I know well, it is approximately - it's over $70 million. The transaction together with the investment from Abry as well as the acquisition would trip 382, so they would be limited, but we'd still have use of a significant amount of those NOLs.

[Operator Instructions]. Our next question comes from a line of William Gibson with Roth Capital.

You were going over things quickly, Chris. But talked about the 20,000-unit opportunity with companies you're doing pilots. Is that in the carrier business?

That's actually both the LVS, which is the Logistics Visibility and also the CarrierWeb in cab. The pilot - yes, there's both.

Good. And what's sort of your sense of the timing of the traction there where people start booking real orders and volume? Is that something we see in the second half? Or is that more of a 2020 story?

No, I think, we'll see it in the second half. We - right now the - some of the early orders that we're getting are just part of the fleet, right? So - and usually, it'll be replacement vehicles first. So like as they get new trailers, as they get new tractors. But then there are some companies that we're talking to, and these are in the top 100 that are looking at full replacements. So again I don't - even there though, you'll have a rollout time, so won't be like you'd be able to outfit the whole fleet in the quarter. But you'll start seeing numbers in Q3 and Q4.

Your next comes from the line of Dan Weston with Westcap Management.

First on Jungheinrich. Chris, can you give us any color from your side that it's been almost three months since you announced the partnership. And when you announced it originally, you were talking about the agreement covering several thousand units. Now given the benefit of having a few months to work with them, do you think that, that could potentially grow substantially from that initial several thousand you were talking about?

Yes, I can only relay to the conversations that we've had with Jungheinrich and - with just - I think we'd both be disappointed. And I think that's almost direct quote from both of us in the meeting, phenomenally disappointed if this is all we did. So the goal is, obviously, we got to execute, which we are. They're actually very happy with our progress. We white labeled the software already. We're finishing up, as I mentioned, the hardware, will start delivering literally the first big block of orders here at the end of Q2 or early Q3, and then they'll get into a cadence like every quarter. And as soon as we see the channel, the throughput through the channel, then I think you'll see the uptick. So you got to give us a couple of quarters to execute.

Yes. Fair enough. And then on the Pointer acquisition, as it pertains to Avis, could you give us your thoughts in terms of using Pointer now as you move into Avis Phase 2? And as it relates to your kind of R&D processes and getting more makes and models certified to rollout, is - how instrumental is Pointer as opposed to the other guy you were using in the past?

I think it's instrumental, but there's a difference between how we certify a vehicle and then how Pointer certifies vehicles. But that can be reconciled over the next several months like actually by the 2020 rollout time. The real key of working with Pointer and sell Cellocator, which is their hardware manufacturer that's under the Pointer brand, is getting basically a lower VOM cost because of volume. If you think about it, you were - they're building about 200,000-some units here. We build 75,000. So just to combine volumes, we can drive down the cost, we can actually consolidate platforms. So again, a lot of it's about cost reduction as well as feature improvement in the next platform that we develop.

Thank you. At this time, I'm showing no further questions. And now I'd like to turn the call back over to Mr. Chris Wolfe for closing remarks.

Thank you for joining us today. I'd like to thank our employees, customers, partners and shareholders for their continued support. We look forward to updating you on our next call. Operator?

Ladies and gentlemen, thank you for participating in today's conference. That concludes the presentation. You may now disconnect. Everyone, have a wonderful day.