Pointer Telocation Reports Third Quarter 2017 Financial Results
ROSH HAAYIN, Israel, Nov. 15, 2017 /PRNewswire/ --
Financial Highlights of the Quarter
-- Record revenues of $20.2 million, up 27% year-over-year; -- Recurring service revenues of $13.3 million, up 27% year-over-year; -- Record EBITDA of $3.6 million, up 87% year-over-year; -- Total subscribers reached 249,000, an increase of 26% year-over-year;
Pointer Telocation Ltd. (NASDAQ CM: PNTR) (TASE: PNTR) - a leading provider of telematic services and technology solutions for Fleet Management, Mobile Asset Management and Internet of Vehicles, announced its financial results for the third quarter of 2017.([1])
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Financial summary for the third quarter of 2017
Revenues for the third quarter of 2017 increased 27% to a record $20.2 million as compared to $15.9 million in the third quarter of 2016.
Revenues from products in the third quarter of 2017 increased 28% to $6.9 million (34% of revenues) compared to $5.4 million (34% of revenues) in the comparable period of 2016.
Revenues from recurring services in the third quarter of 2017 increased 27% to $13.3 million (66% of revenues) compared to $10.5 million (66% of revenues), in the comparable period of 2016. The growth in service revenue was primarily due to the growth in the subscriber base which grew by 51,000 subscribers since September 30, 2016 and 10,000 subscribers since June 30, 2017.
Gross profit was $10.5 million (51.8% of revenues) compared to $7.8 million (49.2% of revenues) in the third quarter of 2016.
Operating income on a GAAP basis was $2.9 million (14.4% of revenues), an increase of 108%, compared with $1.4 million (8.8% of revenues) in the third quarter of 2016.
Non-GAAP operating income was $3.1 million (15.3% of revenues), an increase of 71% compared to $1.8 million (11.4% of revenues) in the third quarter of 2016.
GAAP net income was $1.9 million (9.3% of revenues), an increase of 163% compared to $0.7 (4.5% of revenues) million reported in the third quarter of 2016.
Non-GAAP net income was $2.3 million (11.4% of revenues), an increase of 61%, compared with $1.4 million (9.0% of revenues) in the third quarter of 2016.
EBITDA was $3.6 million (17.8% of revenues), an increase of 87% compared with $1.9 million (12.1% of revenues) in the third quarter of 2016.
Cash and cash equivalents totaled $7.0 million and total debt was $11.6 million. Operating cash flow in the quarter was $3.3 million.
Management Comment
David Mahlab, Pointer's Chief Executive Officer, commented: "We are very pleased with our financial results, showing very strong revenue growth, record EBITDA and strong margins across the board. The integration of our recent acquisition in Brazil of Cielo's operation is progressing as planned and we believe that we will enjoy the full benefit of the cost synergies in 2018. In South Africa, we recently announced an acquisition, in line with our growth strategy, which we expect will also contribute positively in the coming quarters."
Mr. Mahlab continued, "We have recently seen increased interest in Cellotrack Nano, our new solution for Mobile Asset Management. We have a number of prospects undergoing evaluations and we believe it will be a long-term growth engine for Pointer. We are also pleased with the increased penetration of our connected car solution following our intensive R&D and marketing efforts over the past few quarters. Pointer's continued solid results represent the ongoing successful execution of our long-term growth strategy."
Conference Call Information Pointer Telocation's management will host a conference call today, at 7:00am Pacific Time, 10:00 Eastern Time, 17:00 Israel time. On the call, management will review and discuss the results. To listen to the call, please dial in to one of the following teleconferencing numbers. Please begin placing your call a few minutes before the conference call commences.
Dial in numbers are as follows:
From the USA: +1-888-281-1167; From Israel: 03-918-0685; From the UK 0-800-917-5108
A replay will be available a few hours following the call on the company's website.
Reconciliation between results on a GAAP and Non-GAAP basis
Reconciliation between results on a GAAP and Non-GAAP basis is provided in a table immediately following the Condensed Interim Consolidated Statements of Cash Flows.
Pointer uses EBITDA and Non-GAAP net income as Non-GAAP financial performance measurements.
Pointer calculates EBITDA by adding back to net income financial expenses, taxes, depreciation and amortization and impairment of goodwill and intangible assets.
Pointer calculates Non-GAAP net income by adding back to net income the effects of non-cash stock based compensation expenses, amortization and impairment of long lived assets, non-cash tax expenses, other expenses of retirement costs, spin-off related expenses and losses and acquisition related one-time costs.
The purpose of such adjustments is to give an indication of the Company's performance exclusive of Non-GAAP charges that are considered by management to be outside of the Company's core operating results.
EBITDA and non-GAAP net income are provided to investors to complement results provided in accordance with GAAP, as management believes the measure helps illustrate underlying operating trends in the Company's business and uses the measure to establish internal budgets and goals, manage the business and evaluate performance. Management believes that these non-GAAP measures help investors to understand the Company's current and future operating cash flow and performance, especially as the Company's acquisitions have resulted in amortization and non-cash items that have had a material impact on the Company's GAAP profits. EBITDA and non GAAP net income should not be considered in isolation or as a substitute for comparable measures calculated and should be read in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP. These non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies.
About Pointer Telocation
For over 20 years, Pointer has rewritten the rules for the Mobile Resource Management (MRM) market and is a pioneer in the Connected Car segment. Pointer has in-depth knowledge of the needs of this market and has developed a full suite of tools, technology and services to respond to them. The vehicles of the future will be intimately networked with the outside world, enhancing and optimizing the in-car experience.
Pointer's innovative and reliable cloud-based software-as-a-service (SAAS) platform extracts and captures an organization's critical mobility data points - from office, drivers, routes, points-of-interest, logistic-network, vehicles, trailers, containers and cargo. The SAAS platform analyzes the raw data converting it into valuable information for Pointer's customers providing them with actionable insights and thus enabling the customers to improve their bottom line and increase their profitably.
For more information, please visit http://www.pointer.com
Forward Looking Statements
This press release contains historical information and forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995 with respect to the business, financial condition and results of operations of the Company. The words "believe," "expect," "anticipate," "intend," "seems," "plan," "aim," "should" and similar expressions are intended to identify forward-looking statements. Such statements reflect the current views, assumptions and expectations of the Company with respect to future events and are subject to risks and uncertainties. Many factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in the markets in which the Company operates and in general economic and business conditions, loss or gain of key customers and unpredictable sales cycles, competitive pressures, market acceptance of new products, inability to meet efficiency and cost reduction objectives, changes in business strategy and various other factors, both referenced and not referenced in this press release. Various risks and uncertainties may affect the Company and its results of operations, as described in reports filed by the Company with the Securities and Exchange Commission from time to time. The Company does not assume any obligation to update these forward-looking statements.
INTERIM CONSOLIDATED BALANCE SHEETS ----------------------------------- U.S. dollars in thousands September 30, December 31, 2017 2016 ---- ---- Unaudited --------- ASSETS CURRENT ASSETS: Cash and cash equivalents 7,004 6,066 Trade receivables 14,440 11,464 Other accounts receivable and prepaid expenses 3,180 2,504 Inventories 6,216 5,242 Total current assets 30,840 25,276 ------ ------ LONG-TERM ASSETS: Long-term loan to related party 944 831 Long-term accounts receivable 683 564 Severance pay fund 3,381 2,878 Property and equipment, net 6,119 5,614 Other intangible assets, net 1,905 2,178 Goodwill 40,843 38,107 Deferred tax asset 286 1,433 --- ----- Total long-term assets 54,161 51,605 ------ ------ Total assets 85,001 76,881 ====== ======
INTERIM CONSOLIDATED BALANCE SHEETS ----------------------------------- U.S. dollars in thousands September 30, December 31, 2017 2016 ---- ---- Unaudited --------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short-term bank credit and current maturities of long-term loans 5,347 4,836 Trade payables 6,282 7,116 Deferred revenues and customer advances 890 1,037 Other accounts payable and accrued expenses 9,274 6,839 Total current liabilities 21,793 19,828 ------------------------- ------ ------ LONG-TERM LIABILITIES: Long-term loans from banks 6,225 10,182 Deferred taxes and other long-term liabilities 987 976 Accrued severance pay 3,868 3,206 Total long term liabilities 11,080 14,364 --------------------------- ------ ------ COMMITMENTS AND CONTINGENT LIABILITIES EQUITY: Pointer Telocation Ltd's shareholders' equity: Share capital 5,993 5,837 Additional paid-in capital 128,967 128,438 Accumulated other comprehensive income (2,289) (5,633) Accumulated deficit (80,708) (86,115) ------- ------- Total Pointer Telocation Ltd's shareholders' equity 51,963 42,527 ------ ------ Non-controlling interest 165 162 --- --- Total equity 52,128 42,689 ------ ------ Total liabilities and equity 85,001 76,881 ====== ======
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS --------------------------------------------- U.S. dollars in thousands Nine months ended Three months ended Year ended September 30, September 30, December 31, 2017 2016 2017 2016 2016 ---- ---- ---- ---- ---- Unaudited Unaudited --------- --------- Revenues: Products 20,725 16,948 6,896 5,394 22,784 Services 38,579 30,007 13,336 10,522 41,569 ------ ------ ------ ------ ------ Total revenues 59,304 46,955 20,232 15,916 64,353 -------------- ------ ------ ------ ------ ------ Cost of revenues: Products 12,831 10,479 4,078 3,301 13,904 Services 16,294 13,563 5,673 4,789 18,672 Total cost of revenues 29,125 24,042 9,751 8,090 32,576 ------ ------ ----- ----- ------ Gross profit 30,179 22,913 10,481 7,826 31,777 ------ ------ ------ ----- ------ Operating expenses: Research and development 3,024 2,694 1,037 870 3,669 Selling and marketing 10,360 8,714 3,599 3,099 11,774 General and administrative 8,463 6,378 2,827 2,152 9,004 Amortization of intangible assets 339 300 112 105 473 One-time acquisition related costs - 200 - 200 609 Total operating expenses 22,186 18,286 7,575 6,426 25,529 ------ ------ ----- ----- ------ Operating income 7,993 4,627 2,906 1,400 6,248 Financial expenses, net 708 622 288 379 1,046 Other expenses (income) (7) 5 (4) 8 9 --- --- --- --- --- Income before taxes on income 7,292 4,000 2,622 1,013 5,193 Taxes on income 1,877 1,151 739 298 1,845 ----- ----- --- --- ----- Income from continuing operations 5,415 2,849 1,883 715 3,348 Income from discontinued operation, net - 154 - - 154 --- --- --- --- --- Net income 5,415 3,003 1,883 715 3,502 ===== ===== ===== === ===== Earnings per share from continuing operations attributable to Pointer Telocation Ltd's shareholders: Basic net earnings per share $0.68 $0.36 $0.24 $0.09 $0.43 ===== ===== ===== ===== ===== Diluted net earnings per share $0.67 $0.36 $0.23 $0.09 $0.42 ===== ===== ===== ===== ===== Weighted average -Basic number of shares 7,977,376 7,799,257 7,989,398 7,825,840 7,820,767 ========= ========= ========= ========= ========= Weighted average - fully diluted number of shares 8,104,756 7,938,800 8,172,362 7,967,559 7,938,290 ========= ========= ========= ========= =========
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS --------------------------------------------- U.S. dollars in thousands Nine months ended Three months ended Year ended September 30, September 30, December 31, 2017 2016 2017 2016 2016 ---- ---- ---- ---- ---- Unaudited Unaudited --------- --------- Cash flows from operating activities: ------------------------------------- Net income 5,415 3,003 1,883 715 3,502 Adjustments required to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,142 2,306 691 529 3,258 Accrued interest and exchange rate changes of debenture and long-term loans - 29 - (45) 29 Accrued severance pay, net 134 37 22 (84) 20 Gain from sale of property and equipment, net (85) (205) (18) (25) (232) Stock-based compensation 299 205 83 111 320 Decrease (increase) in trade receivables, net (2,271) (3,430) (144) 854 (3,489) Decrease (increase) in other accounts receivable and prepaid expenses (569) (750) (89) 156 (942) Decrease (increase) in inventories (807) 90 (240) (353) (1,063) Decrease in deferred income taxes 1,096 1,722 274 685 1,774 Decrease (increase) in long-term accounts receivable 4 (240) (48) (231) 99 Increase (decrease) in trade payables (1,558) 2,052 (347) 10 3,346 Increase (decrease) in other accounts payable and accrued expenses 2,200 1,568 1,206 (893) 2,455 Net cash provided by operating activities 6,000 6,387 3,273 1,429 9,077 ----- ----- ----- Cash flows from investing activities: ------------------------------------- Purchase of property and equipment (1,987) (3,577) (875) (716) (4,129) Purchase of other intangible assets - (115) - - (115) Proceeds from sale of property and equipment 86 624 31 30 648 Acquisition of subsidiary (a) - - - - (8,531) Net cash used in investing activities (1,901) (3,068) (844) (686) (12,127) ------ ------ ---- ---- -------
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. dollars in thousands Nine months ended Three months ended Year ended September 30, September 30, December 31, 2017 2016 2017 2016 2016 ---- ---- ---- ---- ---- Unaudited Unaudited --------- --------- Cash flows from financing activities: ------------------------------------- Receipt of long-term loans from banks - 6,762 - 6,667 6,777 Repayment of long-term loans from banks (3,369) (3,575) (1,356) (1,325) (5,490) Proceeds from issuance of shares and exercise of options, net of issuance costs 387 71 111 71 98 Distribution as a dividend in kind of previously - (1,870) - - (1,870) consolidated subsidiary (b) Short-term bank credit, net (305) 72 (3) (56) 716 Net cash provided (used) in financing activities (3,287) 1,460 (1,248) 5,357 231 ------ ----- ------ ----- --- Effect of exchange rate on cash and cash equivalents 126 (60) 123 221 (462) --- --- --- --- ---- Increase (decrease) in cash and cash equivalents 938 4,719 1,304 6,321 (3,281) Cash and cash equivalents at the beginning of the period 6,066 9,347 5,700 7,745 9,347 ----- ----- ----- ----- ----- Cash and cash equivalents at the end of the period 7,004 14,066 14,066 6,066 7,004 ===== (a) Acquisition of subsidiary: ------------------------------ - - - (334) Working capital (Cash and cash - equivalent excluded) Property and equipment - - - - (1,239) Intangible assets - - - - (2,098) Goodwill - - - - (6,070) Deferred taxes - - - - 714 Payables for acquisition of - - - - 496 investments in subsidiaries - - - - (8,531) === === === === ======
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. dollars in thousands Nine months ended Three months ended Year ended September 30, September 30, December 31, 2017 2016 2017 2016 2016 ---- ---- ---- ---- ---- Unaudited Unaudited --------- --------- (b) Distribution as a dividend in kind of previously consolidated subsidiary: ------------------------ The subsidiaries' assets and liabilities at date of distribution: Working capital - (5,443) - - (5,443) (excluding cash and cash equivalents) Property and equipment - 7,048 - - 7,048 Goodwill and other intangible assets - 15,883 - - 15,883 Other long term liabilities - (1,781) - - (1,781) Non-controlling interest - 373 - - 373 Accumulated other comprehensive loss - (213) - - (213) Dividend in kind - (17,737) - - (17,737) - (1,870) - - (1,870) === ====== === === ======
ADDITIONAL INFORMATION U.S. dollars in thousands (except share and per share data) The following table reconciles the GAAP to non-GAAP operating results: Nine months ended Three months ended Year ended September 30, September 30, December 31, 2017 2016 2017 2016 2016 ---- ---- ---- ---- ---- GAAP gross profit 30,179 22,913 10,481 7,826 31,777 Stock-based compensation expenses 2 5 1 1 6 --- --- Non-GAAP gross profit 30,181 22,918 10,482 7,827 31,783 ====== ====== ====== ===== ====== GAAP operating expenses 22,186 18,286 7,575 6,426 25,529 Stock-based compensation expenses 297 200 82 110 314 Amortization and impairment of long lived assets 339 300 112 105 473 Other expenses of retirement costs 125 - - - - Acquisition related one-time costs - 200 - 200 609 Non-GAAP operating expenses 21,425 17,586 7,381 6,011 24,133 ====== ====== ===== ===== ====== GAAP operating income 7,993 4,627 2,906 1,400 6,248 Non-GAAP operating income 8,756 5,332 3,101 1,816 7,650 ===== ===== ===== ===== ===== GAAP net income from continuing operations 5,415 2,849 1,883 715 3,348 Stock-based compensation expenses 299 205 83 111 320 Amortization and impairment of long lived assets 339 300 112 105 473 Other expenses of retirement costs 125 - - - - Non cash tax expenses 1,030 1,151 229 298 1,723 Acquisition related one-time costs - 200 - 200 609 --- --- Non-GAAP net income from continuing operations 7,208 4,705 2,307 1,429 6,473 Income from discontinued operation - 154 - - 154 Non cash tax expenses - 249 - - 249 Spin-off related expenses and losses - 349 - - 349 Amortization and impairment of long lived assets - 67 - - 67 --- --- --- --- --- Non-GAAP net income 7,208 5,524 2,307 1,429 7,292 ===== ===== ===== ===== ===== Non-GAAP net income per share from continuing operations - Diluted 0.89 0.59 0.28 0.18 0.82 Non-GAAP weighted average number of shares - Diluted* 7,938,800 7,967,559 7,938,290 8,104,756 8,172,362
* In calculating diluted non-GAAP net income per share, the diluted weighted average number of shares outstanding excludes the effects of stock-based compensation expenses in accordance with FASB ASC 718.
EBITDA U.S. dollars in thousands Nine months ended Three months ended Year ended December 31, September 30, September 30, 2017 2016 2017 2016 2016 ---- ---- ---- ---- ---- GAAP Net income from continuing operations as reported: 5,415 2,849 3,348 1,883 715 Financial expenses, net 708 622 288 379 1,046 Tax on income 1,877 1,151 739 298 1,845 Depreciation, amortization and impairment of goodwill and intangible assets 2,138 1,638 2,590 687 529 --- --- EBITDA from continuing operations 10,138 6,260 3,597 1,921 8,829 Income (loss) from discontinued operation - 154 - - 154 Financial expenses , net - 47 - - 47 Tax on income - 249 - - 249 Depreciation, amortization and impairment of goodwill and intangible assets - 668 - - 668 --- --- --- --- --- EBITDA 10,138 7,378 3,597 1,921 9,947 ====== ===== ===== ===== =====
[1] On June 8, 2016 Pointer spun off its Israeli subsidiary, Shagrir Group Vehicle Services Ltd., through which Pointer carried out its road side assistance (RSA) activities and listed Shagrir's shares for trade on the Tel Aviv Stock Exchange. The results of Shagrir until that date are included in Pointer's results as discontinued operation.
Contacts:
Yaniv Dorani, CFO
Tel.: +972-3-572 3111
E-mail: yanivd@pointer.com
Gavriel Frohwein/Ehud Helft, GK Investor Relations
Tel: +1-646-688-3559
E-mail: pointer@gkir.com
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SOURCE Pointer Telocation Ltd.