Micronet Enertec Reports Second Quarter 2017 Financial Results
MONTVALE, N.J., Aug. 16, 2017 /PRNewswire/ -- Micronet Enertec Technologies, Inc. (NASDAQCM: MICT), a developer and manufacturer of rugged computers, tablets and computer-based systems for the commercial Mobile Resource Management (MRM) market and for the Aerospace and Defense markets, today announced financial results for the second quarter and six months ended June 30, 2017.
"We achieved a record backlog of $16.5 million and $22.5 million as of the end of the second quarter and August 10, 2017 respectively, with most of that attributed to new contracts signed for thousands of units to be delivered by Micronet, our MRM division. As Micronet works to increase its production to meet demand, its backlog has grown, though its impact on year-to-date revenues has been delayed. Primarily for this reason, during the second quarter and the first six months of 2017, we experienced a decline in revenues as compared to the same periods in 2016. We anticipate top line numbers to increase for the balance of 2017 as Micronet delivers on purchase orders during the third and fourth quarters of 2017. Enertec continues its consistent performance, delivering on previously signed long-term contracts for Aerospace and Defense contracts and services," stated David Lucatz, Chief Executive Officer of Micronet Enertec Technologies.
"Technology is our core competence, and as Micronet-Enertec continues to enhance its top management team, we are pleased to welcome Mr. David Markus as the new CEO of Micronet Israel," Lucatz commented.
Mr. Markus previously served as the Chief Technology Officer (CTO) at Pointer Telocation - a global MRM company, where he built and managed the company's R&D group and was also responsible for the company's products strategy, customer support and IT. He brings deep knowledge in technology, strategy and business development in the MRM space and will lead the fast-paced growth at Micronet.
Second Quarter 2017 Review
-- Backlog as of June 30, 2017 for Micronet was $9.1 million and for
Enertec was $7.4 million, for a combined backlog of $16.5 million, an
increase of 7% quarter-over-quarter.
-- Total revenue was $5.9 million for the second quarter of 2017, an
increase of 12% on a quarter-over-quarter basis from revenues of $5.3
million in the first quarter of 2017 and a decrease of 12% from $6.7
million in the second quarter of 2016.
-- Gross profit margin was 14% in the second quarter of 2017, an increase
of 1% on a quarter-over-quarter basis and a decrease of 9% as compared
to 23% in the second quarter of 2016. The decrease in overall gross
margin was related to an increase in cost associated with the
introduction of a new line of products at Micronet and contracts with
lower profitability at Enertec.
-- R&D expense for the second quarter of 2017 was $618,000, or 10% of
sales, compared to $683,000 or 10% of sales, in the second quarter of
2016.
-- SG&A expense decreased by $253,000 to $1.75 million, or 30% of sales, as
compared to $2.0 million, or 30% of sales, in the second quarter of
2016.
-- Net loss attributable to Micronet Enertec Technologies, Inc. for the
second quarter of 2017 was $1,331,000, or ($0.20) per basic and diluted
share, a 9% increase compared to a net loss of $1,219,000, or ($0.21)
per basic and diluted share, for the second quarter of 2016. Non-GAAP
net loss for the second quarter of 2017 was $1,196,000 or ($0.18) per
basic and diluted share, as compared to $967,000, or ($0.16) per basic
and diluted share, for the second quarter of 2016. A reconciliation of
GAAP to non-GAAP net loss and loss per share is provided in the table at
the end of this press release.
-- The Company reported a loss from continuing operations of $1,735,000 for
the second quarter of 2017, as compared to a loss of $1,353,000 in the
second quarter of 2016 and a loss of $2,091,000_in the first quarter of
2017
-- At June 30, 2017, the Company reported cash totaling $7.7 million and
working capital of $6.4 million.
Six Months 2017 Review
-- Total revenue was $11.2 million for the first six months of 2017, a
decrease of 15% from $13.2 million in the first six months of 2016.
-- Gross profit margin was 14% in the first six months of 2017, as compared
to 28% in the first six months of 2016. The decrease in overall gross
margin was related to an increase in cost associated with the
introduction of a new line of products at Micronet and engaging in
strategic contracts with lower profitability at Enertec.
-- Research and development (R&D) expense for the first six months of 2017
was $1,134,000, or 10% of sales, compared to $1,383,000, or 10% of
sales, in the first six months of 2016.
-- Selling, General and Administrative (SG&A) expense was $3.8 million in
the first six months of 2017, as compared to $3.5 million in first six
months of 2016. For the first six months of 2017 this represented 34% of
sales as compared to 26% of sales in the same period in 2016,
respectively.
-- Net loss attributable to Micronet Enertec Technologies, Inc. for the
first six months of 2017 was $2,943,000, or ($0.45) per basic and
diluted share, an 89% increase compared to a net loss of $1,558,000, or
($0.27) per basic and diluted share, for the first six months of 2016.
Non-GAAP net loss for the first six months of 2017 was $2,644,000 or
($0.40) per basic and diluted share, as compared to $1,082,000, or
($0.18) per basic and diluted share, for the first six months of 2016. A
reconciliation of GAAP to non-GAAP net loss and loss per share is
provided in the table at the end of this press release.
-- The Company reported a loss from continuing operations of $3,826,000 for
the first six months of 2017, as compared a loss of $1,696,000 in the
first six months of 2016.
Recent Developments
During the second quarter of 2017, Enertec continued to deliver products and services to its Aerospace & Defense customers under long term contracts, which represent a $7.4 million backlog as of the end of the second quarter of 2017. In April, Enertec entered into a Teaming Agreement with a large aerospace and defense manufacturer based in India to jointly pursue contracts with Israeli Aerospace and Defense companies that have offset obligations in India.
Micronet has a backlog $9.1 million and $13.5 million as of June 30, 2017 and August 10, 2017 respectively and has received multiple substantial orders during the second and third quarters of 2017 including:
-- $2,100,000 purchase order from a current customer for 8,000 units of its
TREQ®-317. The order is expected to be fulfilled during the third and
fourth quarters of 2017.
-- $1,060,000 purchase order for the TREQr5 product from a leading fleet
management solutions provider. The order is expected to be fulfilled by
the end of Q3 2017.
-- $4,300,000 purchase order for the TREQr5 product from a leading fleet
management solutions provider. The order is expected to be fulfilled
during the next quarters
Conference Call
Micronet Enertec will host a conference call today at 9:00 a.m. ET to discuss the Company's financial results for the second quarter ended June 30, 2017. The conference call number for U.S. based callers is 1-866-229-7198. Callers from outside of the U.S. should dial 972-3-918-0692. A slide presentation accompanying management's remarks can be accessed at www.micronet-enertec.com
Participants may also access a live webcast of the conference call through the Investor Relations section of Micronet Enertec's website at:
http://veidan-stream.com/micronetq2-2017.html
A telephone replay of the call will be available for two weeks at: 1-888-269-0005, outside of the U.S.: 972-3-3-925-5927.
About Micronet Enertec Technologies, Inc.
Micronet Enertec Technologies, Inc. (NASDAQCM: MICT) operates through two primary companies, Enertec Systems 2001 Ltd, its wholly-owned subsidiary, and Micronet Ltd, in which it has a controlling interest. Micronet operates in the growing commercial MRM market, mainly in the United States. Micronet designs, develops, manufactures and sells rugged mobile computing devices that provide fleet operators and field workforces with computing solutions in challenging work environments. Enertec operates in the Defense and Aerospace markets and designs, develops, manufactures and supplies various customized military computer-based systems for missile defense systems, command and control and others. The Company's products, solutions and services are designed to perform in severe environments and battlefield conditions. For more information please visit: www.micronet-enertec.com, the content of which is not incorporated by reference into this press release.
Forward-looking Statement
This press release contains express or implied forward-looking statements within the Private Securities Litigation Reform Act of 1995 and other U.S. Federal securities laws. These forward-looking statements include, but are not limited to, those statements regarding our expectation that we expect our top line numbers to increase for the balance of 2017. The forward-looking statements contained in this press release are subject to other risks and uncertainties, including those discussed in the "Risk Factors" section and elsewhere in the Company's Annual Report on Form 10-K for the year ended December 31, 2016 and in subsequent filings with the Securities and Exchange Commission. Except as otherwise required by law, the Company is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.
MICRONET ENERTEC TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(USD In Thousands, Except Share and Par Value Data)
June 30, December 31,
2017 2016
---- ----
ASSETS
Current
assets:
Cash and cash
equivalents $3,056 $668
Restricted
cash 4,720 4,488
Marketable
securities - 2,978
Trade
accounts
receivable,
net 12,136 11,558
Inventories 5,934 5,758
Other
accounts
receivable 967 319
--- ---
Total current
assets 26,813 25,769
------ ------
Property and
equipment,
net 1,750 1,641
Intangible
assets and
others, net 2,622 3,013
Long term
deposit 36 34
Goodwill 1,466 1,466
----- -----
Total long
term assets 5,874 6,154
----- -----
Total assets $32,687 $31,923
======= =======
MICRONET ENERTEC TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(USD In Thousands, Except Share and Par Value Data)
June 30, December 31,
2017 2016
---- ----
LIABILITIES AND EQUITY
Short term bank credit and
current portion of long term
bank loans $10,217 $9,993
Short term credit from others
and current portion of long
term loans from others 2,515 3,114
Trade accounts payable 5,478 4,130
Other accounts payable 2,207 2,383
----- -----
Total current liabilities 20,417 19,620
------ ------
Long term loans from banks 1,201 1,093
Long term loans from others 840 188
Accrued severance pay, net 91 57
Deferred tax liabilities, net 2 7
--- ---
Total long term liabilities 2,134 1,345
----- -----
Stockholders' Equity:
Preferred stock; $.001 par
value, 5,000,000 shares
authorized, none issued and
outstanding
Common stock; $.001 par value,
25,000,000 shares authorized,
6,919,513 and 6,385,092 shares
issued and outstanding as of
June 30, 2017 and December 31,
2016, respectively. 7 6
Additional paid in capital 9,447 8,748
Accumulated other comprehensive
income (loss) (223) 11
Accumulated loss (4,933) (1,990)
------ ------
Micronet Enertec stockholders'
equity 4,298 6,775
----- -----
Non-controlling interests 5,838 4,183
----- -----
Total equity 10,136 10,958
------ ------
Total liabilities and equity $32,687 $31,923
======= =======
MICRONET ENERTEC TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(USD In Thousands, Except Share and Earnings Per Share Data)
(Unaudited)
Six months ended Three months ended
June 30, June 30,
-------- --------
2017 2016 2017 2016
---- ---- ---- ----
Revenues $11,179 $13,203 $5,920 $6,721
Cost of revenues 9,648 9,566 5,076 5,163
----- ----- ----- -----
Gross profit 1,531 3,637 844 1,558
----- ----- --- -----
Operating expenses:
Research and development 1,134 1,383 618 683
Selling and marketing 1,147 836 601 478
General and administrative 2,606 2,654 1,142 1,518
Amortization of intangible assets 470 460 218 232
--- --- --- ---
Total operating expenses 5,357 5,333 2,579 2,911
----- ----- ----- -----
Loss from operations (3,826) (1,696) (1,735) (1,353)
Financial expenses, net 435 261 297 131
--- --- --- ---
Loss before provision for income taxes (4,261) (1,957) (2,032) (1,484)
Provision (benefit) for income taxes 29 (20) (44) (51)
--- --- --- ---
Net loss (4,290) (1,937) (1,988) (1,433)
------ ------ ------ ------
Net loss attributable to non-
controlling interests (1,347) (379) (657) (214)
------ ---- ---- ----
Net loss attributable to Micronet
Enertec Technologies, Inc. (2,943) (1,558) (1,331) (1,219)
====== ====== ====== ======
Loss per share attributable to Micronet
Enertec Technologies, Inc.
Basic $(0.45) $(0.27) $(0.20) $(0.21)
====== ====== ====== ======
Weighted average common shares
outstanding:
Basic 6,557,283 5,871,039 6,683,139 5,876,921
========= ========= ========= =========
Non-GAAP Financial Measures
In addition to providing financial measurements based on generally accepted accounting principles in the United States of America, or GAAP, we provide additional financial metrics that are not prepared in accordance with GAAP, or non-GAAP financial measures. Management uses non-GAAP financial measures, in addition to GAAP financial measures, to understand and compare operating results across accounting periods, for financial and operational decision making, for planning and forecasting purposes and to evaluate our financial performance.
Management believes that these non-GAAP financial measures reflect our ongoing business in a manner that allows for meaningful comparisons and analysis of trends in our business, as they exclude expenses and gains that are not reflective of our ongoing operating results. Management also believes that these non-GAAP financial measures provide useful information to investors in understanding and evaluating our operating results and future prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies.
The non-GAAP financial measures do not replace the presentation of our GAAP financial results and should only be used as a supplement to, not as a substitute for, our financial results presented in accordance with GAAP.
The non-GAAP adjustments, and the basis for excluding them from non-GAAP financial measures, are outlined below:
-- Amortization of acquired intangible assets - We are required to amortize
the intangible assets, included in our GAAP financial statements,
related to our acquisition of Micronet in 2012 and the Vehicle Business
of Beijer in 2014. The amount of an acquisition's purchase price
allocated to intangible assets and term of its related amortization are
unique to these transactions. The amortization of acquired intangible
assets are non-cash charges. We believe that such changes do not reflect
our operational performance. Therefore, we exclude amortization of
acquired intangible assets to provide investors with a consistent basis
for comparing pre- and post-transaction operating results.
-- Stock-based compensation - Stock based compensation consists of share
based awards granted to certain individuals. They are non-cash and
affected by our historical stock prices which are irrelevant to
forward-looking analyses and are not necessarily linked to our
operational performance.
The following table reconciles, for the periods presented, GAAP net loss attributable to Micronet Enertec to non-GAAP net loss attributable to Micronet Enertec and GAAP loss per diluted share attributable to Micronet Enertec to non-GAAP net loss per diluted share attributable to Micronet Enertec:
Six months ended
June 30,
--------
(Dollars in
Thousands, other
than share and per
share amounts)
-------------
2017 2016
---- ----
GAAP net loss attributable to
Micronet Enertec $(2,943) $(1,558)
Amortization of acquired
intangible assets 250 289
Stock-based compensation and
shares issued to service
providers 52 190
Income tax-effect of above non-
GAAP adjustments (3) (3)
--- ---
Total Non-GAAP net loss
attributable to Micronet Enertec $(2,644) $(1,082)
Non-GAAP net loss per share
attributable to Micronet Enertec $(0.40) $(0.18)
Shares used in per share
calculations 6,557,283 5,871,039
GAAP net loss per share
attributable to Micronet Enertec $(0.45) $(0.27)
Shares used in per share
calculations 6,557,283 5,871,039
Three months ended
June 30,
--------
(Dollars in Thousands,
other than share and
per share amounts)
-----------------
2017 2016
---- ----
GAAP net loss attributable to
Micronet Enertec $(1,331) $(1,219)
Amortization of acquired
intangible assets 118 146
Stock-based compensation and
shares issued to service
providers 19 108
Income tax-effect of above non-
GAAP adjustments (2) (2)
--- ---
Total Non-GAAP net loss
attributable to Micronet Enertec $(1,196) $(967)
Non-GAAP net loss per share
attributable to Micronet Enertec $(0.18) $(0.16)
Shares used in per share
calculations 6,683,139 5,876,921
GAAP net loss per share
attributable to Micronet Enertec $(0.20) $(0.21)
Shares used in per share
calculations 6,683,139 5,876,921
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SOURCE Micronet Enertec Technologies, Inc.
