Home » News Room » I.D. Systems Announced Q2 2009 Financial Results

I.D. Systems, Inc. Reports Second Quarter Financial Results

Hackensack, NJ, August 4, 2009—I.D. Systems, Inc. (NASDAQ: IDSY) today announced its financial results for the second quarter of 2009. Revenues for the three months ended June 30, 2009, were $2.7 million, compared to $5.5 million for the three months ended June 30, 2008. Gross margin increased to 54.8%, compared to 52.5% for the corresponding period in 2008. Net loss for the quarter was $2.3 million, or ($0.21) per basic and diluted share, compared to net loss of $1.5 million, or ($0.14) per basic and diluted share, for the second quarter of 2008.

Non-GAAP net loss for the quarter was $1.8 million, or ($0.17) per basic and diluted share, compared to non-GAAP net loss of $671,000, or ($0.06) per basic and diluted share, for the second quarter of 2008. Non-GAAP results were calculated by adjusting GAAP net results for the impact of stock-based compensation, which was $500,000 for the second quarter of 2009 and $857,000 for the second quarter of 2008. A table entitled “Reconciliation of GAAP to Non-GAAP Financial Measures” is included in this press release.

Jeffrey Jagid, I.D. Systems’ chairman and chief executive officer, said, “We continue to face challenges related to the general economic climate, including cautionary technology spending and unpredictable timing to close business. Budget cutbacks at the U.S. Postal Service, in particular, impacted our results; the Postal Service spent $3.7 million less on our systems this quarter than it did in the second quarter of 2008. However, all of our core enterprise customers continue to expand their use of our wireless vehicle management solutions, which we believe reflects the significant ongoing value provided by our technology.

“Just as important,” continued Mr. Jagid, “we continue to diversify and strengthen our customer base, securing initial orders this quarter from some of the world’s leading consumer goods producers and industrial manufacturers. For the second quarter, our revenue from customers other than the Postal Service increased $900,000 compared to the second quarter in 2008. Our sales pipeline and balance sheet are strong, despite timing uncertainties, and we expect to capitalize on these strengths to continue adding to our foundation of blue chip customers in the coming quarters. Our objective remains to drive rapid customer adoption and expansion of our unique, cost-effective solutions and ultimately deliver shareholder value.”

I.D. Systems’ management continued to focus on cost controls during the second quarter of 2009, including non-sales workforce cutbacks, which are expected to save the company more than $1 million annually, without diminishing the company’s investment in growth opportunities.

Selling, general and administrative expenses for the three months ended June 30, 2009, decreased to $3.8 million, including $392,000 in stock-based compensation, compared to $4.3 million, including $721,000 in stock-based compensation, for the second quarter of 2008.

Research and development expenditures for the second quarter of 2009 decreased slightly to $691,000, including $97,000 in stock-based compensation, compared to $708,000, including $119,000 in stock-based compensation, for the same period in 2008.

Other income of $420,000 during the second quarter of 2009 reflects the change in the fair value in the company’s investment in auction rate securities and the auction rate security rights.

For the six-month period ended June 30, 2009, revenues were $5.6 million, compared to $9.8 million for the six months ended June 30, 2008. Gross profit margin for the six-month period was 54.4%, compared to 50.8% for the comparable period in 2008. Net loss for the six-month period was $5.4 million, or ($0.49) per basic and diluted share, compared to net loss of $3.6 million, or ($0.33) per basic share and diluted share for the first six months of 2008.

Adjusting for $1.1 million in stock-based compensation expenses, non-GAAP net loss for the six months ended June 30, 2009, was $4.3 million, or ($0.40) per basic and diluted share. For the corresponding period in 2008, adjusting for $1.6 million in stock-based compensation expenses, non-GAAP net loss was $1.9 million, or ($0.18) per basic and diluted share. A table entitled “Reconciliation of GAAP to Non-GAAP Financial Measures” is included in this press release.

Selling, general and administrative expenses for the six months ended June 30, 2009, were $8.0 million, including $822,000 in stock-based compensation, compared to $8.5 million, including $1.4 million in stockbased compensation, for the corresponding period in 2008. Research and development expenditures for the first six months of 2009 were $1.38 million, including $212,000 in stock-based compensation, compared to $1.42 million, including $234,000 in stock-based compensation, for the same period in 2008.

As of June 30, 2009, I.D. Systems had $67.0 million in cash and marketable securities, and $25.4 million of working capital, compared to $56.0 million and $30.9 million, respectively, as of December 31, 2008. The increase in cash was due primarily to the borrowing of $12.9 million from a line of credit facility during the first quarter of 2009.

Highlights of the second quarter ended June 30, 2009, included both recurring business from current customers and initial orders from new customers:
- Continued follow-on sales of I.D. Systems’ products and services to core enterprise customers, including Alcoa, Ford Motor Company, the U.S. Postal Service, Wal-Mart Stores, and Walgreen Co.
- Repeat orders from customers established through I.D. Systems’ 2008 acquisition of PowerKey brand industrial vehicle monitoring products, including Automotive Components Holdings, PPG Industries, Raytheon Company, and Whirlpool Corp.
- The selection of I.D. Systems’ PowerFleet™ Vehicle Management System (VMS) by Nestlé Waters North America for deployment on industrial vehicles at two initial sites, with expansion planned to more than 100 sites globally based on expected system benefits, as announced on June 22, 2009.
- The launch of I.D. Systems’ PowerFleet™ VMS at two Audi AG automotive production plants in Europe, pursuant to a blanket purchase order covering all Audi and Volkswagen facilities, which was received from Audi in the first quarter of 2009, as announced on April 7, 2009.
- Initial implementation of I.D. Systems’ PowerFleet™ VMS at other new customers, including ConAgra Foods, Dot Foods, GameStop, Graphic Packaging International, Kaiser Aluminum, and the European arm of a major U.S. consumer packaged goods manufacturer.
- Continued expansion of activity with channel partners, primarily industrial truck manufacturers and their dealers, which directly influenced many of the sales to new customers during the quarter.
- The adoption by I.D. Systems’ Board of Directors of a shareholder rights plan to ensure that our shareholders’ interests are protected against unsolicited attempts to take over the company.

Investor Conference Call
I.D. Systems will hold a conference call for investors and analysts at 4:45 p.m. Eastern Time on August 4, 2009. Jeffrey Jagid, chairman and CEO, will lead a discussion on the results of the quarter and recent developments. After opening remarks, there will be a question and answer period. The conference call will be broadcast live via the Investors section of the company’s website at
www.id-systems.com. To listen to the live call, go to the website at least 10 minutes early to download and install any necessary audio software. If you are unable to listen live, the conference call will be archived on the Investors section of the company’s website for approximately for 90 days.

Non-GAAP Measures
To supplement its financial statements presented in accordance with 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 Expanding the range of wireless solutions 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 and provide further comparative information due to the adoption of accounting standard SFAS 123R. 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. Reconciliation to the nearest GAAP measure of all non-GAAP measures included in this press release can be found in the financial tables included in this press release.

About I.D. Systems
Based in Hackensack, New Jersey, with a European subsidiary in Düsseldorf, Germany, I.D. Systems is a leading provider of wireless solutions for managing and securing high-value enterprise assets, including industrial vehicles, such as forklifts and airport ground support equipment, and rental vehicles. The Company’s patented technology, which utilizes radio frequency identification, or RFID, technology, addresses the needs of organizations to control, track, monitor and analyze their assets. For more information, visit
www.id-systems.com.

“Safe Harbor” Statement:
This press release contains forward looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, such as the Company’s prospects for additional customers and revenues. Forward-looking statements include statements with respect to the Company’s 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 the Company’s 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 forwardlooking statements. These forward-looking statements are subject to risk and uncertainties, including, but not limited to, future economic and business conditions, the loss of any of the Company’s key customers or reduction in the purchase of its products by any such customers, the failure of the market for the Company’s products to continue to develop, the inability to protect the Company’s intellectual property, the inability to manage the Company’s 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 Company’s filings with the Securities and Exchange Commission, including the Company’s annual report on Form 10-K for the year ended December 31, 2008. These risks could cause actual results to differ materially from those expressed in any forward looking statements made by, or on behalf of, the Company. The Company assumes no obligation to update the information contained in this press release.

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