Proving the Business Case for the Internet of Things

ID Systems buys Keytroller for $9m

Steve Rogerson
July 18, 2017



New Jersey-based ID Systems, a provider of mobile asset management technology for the industrial IoT, is to acquire the assets of Keytroller, a manufacturer and marketer of electronic products for managing forklifts, construction vehicles and other industrial equipment.
 
The purchase price of $9m at close consists of $7m in cash and $2m in ID Systems common stock, plus up to $3m in earn-out consideration over two years, also in ID Systems common stock. The acquisition of Florida-based Keytroller is expected to close before the end of this month upon satisfaction of customary closing conditions.
 
In 2016, Keytroller generated revenue of $6.6m and adjusted EBITDA of $1.2m. Beginning in the third quarter of 2017, Keytroller's results will be included as part of ID Systems' industrial truck management product line.
 
The two companies' market positions and distribution channels are complementary. ID Systems sells its flagship PowerFleet industrial truck management systems primarily to large global enterprises and through lift truck manufacturers, while Keytroller markets most of its products through a large network of lift truck dealers to small and medium-size end users. PowerFleet rarely competes head-to-head with Keytroller devices.
 
By combining Keytroller's mid-range and economy products with PowerFleet, ID Systems believes it will become an unmatched single source of fleet management technology for industrial truck owners and operators, which the company says will help it compete more effectively and diversify its revenue sources.
 
The acquisition of Keytroller also gives ID Systems a source of industrial truck usage data for its PowerFleet IQ analytics database, enhancing the value of that tool for multi-site enterprises.
 
For the second quarter ended June 2017, ID Systems expects to report revenue between $10.0m and $10.5m. The midpoint of this estimated revenue range represents approximately 28% sequential revenue growth and 15% year-over-year. The company is scheduled to release its complete second quarter 2017 financial results next month.
 
"We are encouraged by the organic growth reflected in our preliminary second quarter revenue, and excited by our planned acquisition of Keytroller," said ID Systems CEO Chris Wolfe. "Keytroller's business complements our industrial truck management segment incredibly well, from product mix and market position to sales cycle and customer diversification.”
 
The acquisition should contribute immediately to ID Systems' revenue and profitability, as well as position the company to achieve a more predictable, profitable revenue stream from a more diverse customer base.
 
“We look forward to integrating Keytroller's operations smoothly into our corporate family and leveraging the benefits of this acquisition as we continue to focus on future growth," said Wolfe.
 
Headquartered in Woodcliff Lake, New Jersey, with subsidiaries in Texas, Germany and the UK, ID Systems is a provider of wireless M2M products for securing, controlling, tracking and managing high-value enterprise assets, including rental cars, industrial vehicles, trailers, containers and cargo.