Pointer Telocation Reports Second Quarter 2017 Financial Results
ROSH HAAYIN, Israel, Aug. 16, 2017 /PRNewswire/ --
Financial Highlights of the Quarter
-- Record revenues of $20.0 million, up 24% year-over-year;
-- Recurring Service revenues of $12.9 million, up 27% year-over-year;
-- Record EBITDA of $3.4 million, up 54% year-over-year;
-- Net income doubled year-over-year to $2.0 million;
-- Total subscribers reached 239,000, an increase of 24% year-over-year;
Pointer Telocation Ltd. (Nasdaq: PNTR) (TASE: PNTR), a leading provider of telematic services and technology solutions for Fleet Management, Mobile Asset Management and Internet of Vehicles, announced today its financial results for the second quarter of 2017.( [1])
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Financial summary for the second quarter of 2017
Revenues for the second quarter of 2017 increased 24% to $20.0 million as compared to $16.2 million in the second quarter of 2016.
Revenues from products in the second quarter of 2017 increased 18% to $7.1 million (36% of revenues) compared to $6.0 million (37% of revenues) in the comparable period of 2016.
Revenues from recurring services in the second quarter of 2017 increased 27% to $12.9 million (64% of revenues) compared to $10.2 million (63% 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 47,000 subscribers since June 30, 2016 and 8,000 subscribers since March 31, 2017.
Gross profit was $10.3 million (51.4% of revenues) compared to $7.7 million (47.7% of revenues) in the second quarter of 2016.
Operating income on a GAAP basis was $2.8 million (14.1% of revenues), an increase of 72%, compared with $1.6 million (10.1% of revenues) in the second quarter of 2016.
Non-GAAP operating income was $3.1 million (15.2% of revenues), an increase of 71% compared to $1.8 million (11% of revenues) in the second quarter of 2016.
GAAP net income (from continuing operations) was $2.0 million, double the net income of $1.0 million reported in the second quarter of 2016.
Non-GAAP net income (from continuing operations) was $2.6 million (12.9% of revenues), an increase of 78%, compared with $1.5 million (9% of revenues) in the second quarter of 2016.
EBITDA (from continuing operations) was $3.4 million (17.1% of revenues), an increase of 54% compared with $2.2 million (13.8% of revenues) in the second quarter of 2016.
Cash and Cash Equivalents totaled $5.7 million and Total Debt was $12.7 million.
Management Comment
David Mahlab, Pointer's Chief Executive Officer, commented: "We are extremely pleased with our record results for the quarter. We achieved strong revenue growth and increased margins with nearly 2/3 of our total revenues comprised of recurring service revenues. In addition to these financial achievements, we continued to execute our long term strategic objectives to strengthen our position as a leading provider of technology solutions in Fleet Management, Mobile Asset Management and the Internet of Vehicles. Our results demonstrate the success of our long-term strategy for growing our business, increasing profitability and building shareholder value."
Mr. Mahlab continued, "In the past months, we have made great progress on two strategically important deployments. We have successfully completed most of the installations with Femsa, the Coca-Cola bottling company in Mexico, and we have fully deployed our driving behavior solution integrated with Mobileye devices in a 5,000-car fleet in New York City. In addition, we recently announced a new long-term product supply agreement with a leading US-based telematics provider. This contract is the first substantial win for our new Nano CelloTrack technology. We believe this is the first of many other opportunities that we expect to capitalize on in the coming quarters."
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: +1 866 744 5399; From Israel: 03-918-0691; 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.
[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.
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
June 30, December 31,
2017 2016
---- ----
Unaudited
---------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $5,700 $6,066
Trade receivables 14,273 11,464
Other accounts receivable and prepaid expenses 3,008 2,504
Inventories 5,915 5,242
Total current assets 28,896 25,276
------ ------
LONG-TERM ASSETS:
Long-term loan to related party 940 831
Long-term accounts receivable 588 564
Severance pay fund 3,340 2,878
Property and equipment, net 5,752 5,614
Other intangible assets, net 1,939 2,178
Goodwill 40,759 38,107
Deferred tax asset 478 1,433
--- -----
Total long-term assets 53,796 51,605
------ ------
Total assets $82,692 $76,881
======= =======
INTERIM CONSOLIDATED BALANCE SHEETS
-----------------------------------
U.S. dollars in thousands
June 30, December 31,
2017 2016
---- ----
Unaudited
---------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank credit and current maturities of long-term loans $5,211 $4,836
Trade payables 6,539 7,116
Deferred revenues and customer advances 1,079 1,037
Other accounts payable and accrued expenses 7,671 6,839
Total current liabilities 20,500 19,828
------------------------- ------ ------
LONG-TERM LIABILITIES:
Long-term loans from banks 7,525 10,182
Deferred taxes and other long-term liabilities 988 976
Accrued severance pay 3,808 3,206
Total long term liabilities 12,321 14,364
--------------------------- ------ ------
COMMITMENTS AND CONTINGENT LIABILITIES
EQUITY:
Pointer Telocation Ltd's shareholders' equity:
Share capital 5,970 5,837
Additional paid-in capital 128,798 128,438
Accumulated other comprehensive income (2,477) (5,633)
Accumulated deficit (82,588) (86,115)
------- -------
Total Pointer Telocation Ltd's shareholders' equity 49,703 42,527
------ ------
Non-controlling interest 168 162
--- ---
Total equity 49,871 42,689
------ ------
Total liabilities and equity $82,692 $76,881
======= =======
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
---------------------------------------------
U.S. dollars in thousands
Six months ended Three months ended Year ended
June 30, June 30, December 31,
2017 2016 2017 2016 2016
---- ---- ---- ---- ----
Unaudited Unaudited
--------- ---------
Revenues:
Products $13,829 $11,555 $7,147 $6,048 $22,784
Services 25,243 19,485 12,894 10,166 41,569
------ ------ ------ ------ ------
Total revenues 39,072 31,040 20,041 16,214 64,353
-------------- ------ ------ ------ ------ ------
Cost of revenues:
Products 8,753 7,178 4,477 3,782 13,904
Services 10,621 8,774 5,258 4,702 18,672
Total cost of revenues 19,374 15,952 9,735 8,484 32,576
------ ------ ----- ----- ------
Gross profit 19,698 15,088 10,306 7,730 31,777
------ ------ ------ ----- ------
Operating expenses:
Research and development 1,987 1,824 1,017 919 3,669
Selling and marketing 6,761 5,615 3,456 2,968 11,774
General and administrative 5,634 4,227 2,886 2,093 9,004
Amortization of intangible assets 226 195 113 105 473
One-time acquisition related costs - - - - 609
Total operating expenses 14,608 11,861 7,472 6,085 25,529
------ ------ ----- ----- ------
Operating income 5,090 3,227 2,834 1,645 6,248
Financial expenses, net 419 243 259 323 1,046
Other expenses (income) - (4) - 2 9
--- --- --- --- ---
Income before taxes on income 4,671 2,988 2,575 1,320 5,193
Taxes on income 1,138 854 609 276 1,845
----- --- --- --- -----
Income from continuing operations 3,533 2,134 1,966 1,044 3,348
Income (loss) from discontinued operation, net - 154 - (168) 154
--- --- --- ---- ---
Net income $3,533 $2,288 $1,966 $876 $3,502
====== ====== ====== ==== ======
Earnings per share from continuing
operations attributable to Pointer
Telocation Ltd's shareholders:
Basic net earnings per share $0.44 $0.27 $0.24 $0.13 $0.43
===== ===== ===== ===== =====
Diluted net earnings per share $0.44 $0.27 $0.24 $0.13 $0.42
===== ===== ===== ===== =====
Weighted average -Basic number of shares 7,942,957 7,787,009 7,978,102 7,789,365 7,820,767
========= ========= ========= ========= =========
Weighted average - fully diluted number of shares 8,070,953 7,924,421 8,111,119 7,934,321 7,938,290
========= ========= ========= ========= =========
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
---------------------------------------------
U.S. dollars in thousands
Six months ended Three months ended Year ended
June 30, June 30, December 31,
2017 2016 2017 2016 2016
---- ---- ---- ---- ----
Unaudited Unaudited
--------- ---------
Cash flows from operating activities:
-------------------------------------
Net income $3,533 $2,288 $1,966 $876 $3,502
Adjustments required to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 1,451 1,775 601 877 3,258
Accrued interest and exchange rate changes of debenture and long-term loans - 74 - 29
290
Accrued severance pay, net 112 121 54 74 20
Gain from sale of property and equipment, net (67) (179) (49) (53) (232)
Stock-based compensation 217 94 106 36 320
Increase in trade receivables, net (2,127) (4,284) (1,202) (585) (3,489)
Decrease (increase) in other accounts receivable and prepaid expenses (480) (906) 131 (942)
(249)
Decrease (increase) in inventories (567) 443 (418) 207 (1,063)
Decrease in deferred income taxes 822 1,038 452 248 1,774
Decrease (increase) in long-term accounts receivable 52 (9) 123 99
126
Increase (decrease) in trade payables (1,211) 2,042 (732) 296 3,346
Increase in other accounts payable and accrued expenses 994 2,460 192 2,455
1,293
Net cash provided by operating activities 2,729 4,957 1,224 3,436 9,077
----- ----- -----
Cash flows from investing activities:
-------------------------------------
Purchase of property and equipment (1,112) (2,861) (344) (1,284) (4,129)
Purchase of other intangible assets - (115) - (115) (115)
Proceeds from sale of property and equipment 55 594 37 118 648
Acquisition of subsidiary (a) - - - - (8,531)
Net cash used in investing activities (1,057) (2,382) (307) (1,281) (12,127)
------ ------ ---- ------ -------
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
---------------------------------------------
U.S. dollars in thousands
Six months ended Three months ended Year ended
June 30, June 30, December 31,
2017 2016 2017 2016 2016
---- ---- ---- ---- ----
Unaudited Unaudited
--------- ---------
Cash flows from financing activities:
-------------------------------------
Receipt of long-term loans from banks - 95 - - 6,263
Repayment of long-term loans from banks (2,013) (2,250) (1,063) (1,123) (4,976)
Proceeds from issuance of shares and exercise 276 - 197 - 98
of options, net of issuance costs
Distribution as a dividend in kind of previously - (1,870) - (1,870) (1,870)
consolidated subsidiary (b)
Short-term bank credit, net (302) 128 (21) 83 716
Net cash provided (used) in financing activities (2,039) (3,897) (887) (2,910) 231
------ ------ ---- ------ ---
Effect of exchange rate on cash and cash equivalents 1 (280) (84) (155) (462)
--- ---- --- ---- ----
Decrease in cash and cash equivalents (366) (1,602) (54) (910) (3,281)
Cash and cash equivalents at the beginning of the period 6,066 9,347 5,754 8,655 9,347
----- ----- ----- ----- -----
Cash and cash equivalents at the end of the period $5,700 $7,745 $7,745 $6,066
$5,700
======
(a) Acquisition of subsidiary:
--------------------------
Working capital (Cash and cash equivalent excluded) $ - $ - $ - $ - $(334)
Property and equipment - - - - (1,239)
Intangible assets - - - - (2,098)
Goodwill - - - - (6,070)
Deferred taxes - - - - 714
Payables for acquisition of investments in subsidiaries - - - - 496
--- --- --- --- ---
$ - $ - $ - $ - $(8,531)
===================== ===================== ===================== ===================== =======
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
---------------------------------------------
U.S. dollars in thousands
Six months ended Three months ended Year ended
June 30, June 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) (5,443)
(excluding cash and cash equivalents)
Property and equipment - 7,048 - 7,048 7,048
Goodwill and other intangible assets - 15,883 - 15,883 15,883
Other long term liabilities - (1,781) - (1,781) (1,781)
Non-controlling interest - 373 - 373 373
Accumulated other comprehensive loss - (213) - (213) (213)
Dividend in kind (17,737) (17,737) (17,737)
$ - $(1,870) $ - $(1,870) $(1,870)
===================== ======= ===================== ======= =======
(c) Non-cash investing activity:
----------------------------
Purchase of property and equipment $156 $39 $54 $(12) $48
ADDITIONAL INFORMATION
----------------------
U.S. dollars in thousands (except share and per share data)
The following table reconciles the GAAP to non-GAAP operating results:
Six months ended Three months ended Year ended
June 30, June 30, December 31,
2017 2016 2017 2016 2016
---- ---- ---- ---- ----
GAAP gross profit $19,698 $15,088 $10,306 $7,730 $31,777
Stock-based compensation expenses 2 4 1 1 6
--- ---
Non-GAAP gross profit $19,700 15,092 $10,307 7,731 31,783
======= ====== ======= ===== ======
GAAP operating expenses $14,608 $11,861 $7,472 $6,085 $25,529
Stock-based compensation expenses 215 90 105 35 314
Amortization and impairment of long lived assets 226 195 113 105 473
Other expenses of retirement costs 125 - - - -
Acquisition related one-time costs - - - - 609
Non-GAAP operating expenses $14,042 $11,576 $7,254 $5,945 $24,133
======= ======= ====== ====== =======
GAAP operating income $5,090 $3,227 $2,834 $1,645 $6,248
Non-GAAP operating income $5,658 $3,516 $3,053 $1,786 $7,650
====== ====== ====== ====== ======
GAAP net income from continuing operations $3,533 $2,134 $1,966 $1,044 $3,348
Stock-based compensation expenses 217 94 106 36 320
Amortization and impairment of long lived assets 226 195 113 105 473
Other expenses of retirement costs 125 - - - -
Non cash tax expenses 801 854 415 276 1,723
Acquisition related one-time costs - - - - 609
--- ---
Non-GAAP net income from continuing operations $4,902 $3,277 $2,600 $1,461 $6,473
Income (loss) from discontinued operation - 154 - (168) 154
Non cash tax expenses - 249 - 91 249
Spin-off related expenses and losses - 349 - 349 349
Amortization and impairment of long lived assets - 67 - 28 67
--- --- --- --- ---
Non-GAAP net income $4,902 $4,096 $2,600 $1,761 $7,292
====== ====== ====== ====== ======
Non-GAAP net income per share from continuing
operations - Diluted
$0.61 $0.41 $0.32 $0.18 $0.82
Non-GAAP weighted average number of shares 7,938,290
- Diluted*
8,070,953 7,924,421 8,111,119 7,934,321
* 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
Six months ended Three months ended Year ended
June 30, June 30, December 31,
2017 2016 2017 2016 2016
---- ---- ---- ---- ----
GAAP Net income from continuing operations $3,533 $2,134 $3,348
as reported:
$1,966 $1,044
Financial expenses, net 419 243 259 323 1,046
Tax on income 1,138 854 609 276 1,845
Depreciation, amortization and impairment of 1,451 1,109 2,590
goodwill and intangible assets
601 591
--- ---
EBITDA from continuing operations $6,541 $4,340 $3,435 $2,234 $8,829
Income (loss) from discontinued operation - 154 - (168) 154
Financial expenses , net - 47 - 28 47
Tax on income - 249 - 91 249
Depreciation, amortization and impairment of goodwill and intangible assets - 668 - 668
288
---
EBITDA $6,541 $5,458 $3,435 $2,473 $9,947
====== ====== ====== ====== ======
Contact:
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
