SuperCom Reports Significant Improvements in Gross Profit, Earnings, and EPS With $1.4 Million in EBITDA for Q2 2018

HERZLIYA, Israel, Aug. 13, 2018 /PRNewswire/ -- SuperCom (NASDAQ: SPCB), a global provider of secure solutions for the e-government, public safety, healthcare, and finance sectors, reported results for the second quarter of 2018.

Second Quarter 2018 Financial Highlights (Compared to the Second Quarter of 2017)

    --  Revenue decreased to $6.8 million from $7.5 million.
    --  Gross Profit increased 30% to $3.83 million from $3.4 million.
    --  Non-GAAP Gross Margin increased to 59.2% from 48.6%.
    --  Non-GAAP core operating expenses decreased 33% to $3.3 million from $5.4
        million.
    --  EBITDA improved to $1.4 million compared to $1.0 million.
    --  Non-GAAP Net Profit improved to $1.1 million or $0.07 per share from
        $0.46 million or $0.03 per share.
    --  Working Capital increased to $11.3 million from $7.6 million.
    --  Current Ratio increased to 1.62 from 1.5

First Half 2018 Financial Highlights (Compared to the First Half of 2017)

    --  Revenue decreased to $13.8 million from $15.8 million.
    --  Gross Profit increased 19% to $7.7 million from 6.5 million.
    --  Non-GAAP Gross Margin increased to 58.7% from 43.6%.
    --  Non-GAAP core operating expenses decreased 31% to $6.8 million from $9.9
        million.
    --  EBITDA improved to $2.9 million compared to $0.7 million.
    --  Non-GAAP Net Profit improved to $2.1 million or $0.14 per share from
        non-GAAP Net Loss of $(.46) million or $(0.03) per share.

First Half 2018 and Recent Operational Highlights by Business Segment:

e-Gov:

    --  In April 2018, signed a new contract worth approximately $4 million in
        value with an existing national government customer in Africa. Built
        around SuperCom's Magna platform, the deployment will allow for quick
        expansion of additional e-Gov modules, which would lead to potential
        increases in the overall contract size. The majority of the new contract
        is expected to be recognized over the next two years and will grow
        SuperCom's steady-state recurring revenues.
    --  Continued progress on national project deployments as well as transition
        of recent projects in Africa into Steady State.

IoT and Connectivity:

    --  In January 2018, secured an additional contract to provide PureSecurity
        EM Suite in Idaho.
    --  In March 2018, secured an additional contract to provide PureSecurity EM
        Suite in South Carolina.
    --  In April 2018, secured an additional contract to provide PureSecurity EM
        Suite in eastern Texas to an established service provider.
    --  In April 2018, awarded a $7 million project with the national government
        of Sweden to deploy PureSecurity EM Suite.
    --  In June 2018, announced the deployment of an innovative protection from
        domestic violence project with the Sweden national police, a second
        national EM project win in Sweden within two months.
    --  Continued progress on 13 EM project deployments, including those in
        Denmark, Czech Republic, Bulgaria, Canada and the USA.

Cyber Security:

    --  Safend maintains numerous Fortune 500 customers and a greater than 90%
        retention rate in the US, driven by sustained customer satisfaction and
        continued technological improvements.
    --  Continued progress in the development of new advanced cyber security
        products, adding more capabilities, including anti-malware to be
        incorporated into the Safend cyber security platform.

Management Commentary

"We are pleased with our second quarter 2018 results, highlighted by a dramatic improvement in our financial performance compared to the same quarter last year. We also achieved sequential quarterly improvements in profitability margins with 21% EBITDA margins and Non-GAAP gross margins of 59%, and as we continued to optimize our cost structure, Non-GAAP core operating expenses reached a low of $3.3m," said Arie Trabelsi, President and CEO of SuperCom. "We expect more cost optimizations in the following quarters brining us closer to the lean operating structure that we have not seen since 2015, before the strategic acquisitions took place. Yet today, I believe our business prospects are multiples greater, with 2 additional business segments, a major presence in developed markets, over 50% growth in our steady-state recurring revenue, and significant enhancements to our technology portfolio backed by 119 patents."

"We continue to execute on our growth strategy across our business segments. In the recent past we have been expanding organically into new countries and governments faster than ever before with an exceptionally high win rate, including 8 new multi-year project wins in the last 8 months alone. This brings us to over 16 concurrent multi-year project deployments globally, which are expected to generate long term recurring revenues for years to come as well as additional business from customer references."

SuperCom management will host the conference call, followed by a question and answer period.

Date: Monday, August 13, 2018
Time: 10:00 a.m. Eastern time (7:00 a.m. Pacific time)
U.S. toll-free: 877-407-9124
Israel toll-free: 180-940-6247
International: 201-689-8584

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization.

About SuperCom

Since 1988, SuperCom has been a global provider of traditional and digital identity solutions, providing advanced safety, identification and security solutions to governments and organizations, both private and public, throughout the world. Through its proprietary e-government platforms and innovative solutions for traditional and biometrics enrollment, personalization, issuance and border control services, SuperCom has inspired governments and national agencies to design and issue secure Multi-ID documents and robust digital identity solutions to its citizens and visitors. SuperCom offers a unique all-in-one field-proven RFID & mobile technology and product suite, accompanied by advanced complementary services for various industries including healthcare and homecare, security and safety, community public safety, law enforcement, electronic monitoring, livestock monitoring, and building and access automation. For more information, visit www.supercom.com.

Notice Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements preceded or followed by or that otherwise include the words "believes", "expects", "anticipates", "intends", "projects", "estimates", "plans", and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical facts. Forward-looking statements in this release also include statements about business and economic trends. Investors should also consider the areas of risk described under the heading "Forward Looking Statements" and those factors captioned as "Risk Factors" in the Company's periodic reports under the Securities Exchange Act of 1934, as amended, or in connection with any forward-looking statements that may be made by the Company. These statements are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company's filings with the Securities and Exchange Commission (SEC), including the Company's Annual Report on Form 20-F filed with the SEC on May 21, 2018. The Company undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this press release.

Use of Non-GAAP Financial Information

In addition to disclosing financial results calculated in accordance with United States generally accepted accounting principles (GAAP), this release of operating results also contains non-GAAP financial measures, which SuperCom believes are the principal indicators of the operating and financial performance of its business. Management believes the non-GAAP financial measures provided are useful to investors' understanding and assessment of the Company's on-going core operations and prospects for the future, as the charges eliminated are not part of the day-to-day business or reflective of the core operational activities of the Company. Management uses these non-GAAP financial measures as a basis for strategic decisions, forecasting future results and evaluating the Company's current performance. However, such measures should not be considered in isolation or as substitutes for results prepared in accordance with GAAP. Reconciliation of the non-GAAP measures to the most comparable GAAP measures are provided in the schedules attached to this release.

[Tables to follow]


                            SUPERCOM LTD.
                            -------------

                     CONSOLIDATED BALANCE SHEETS
                     ---------------------------

                     (U.S. dollars in thousands)




                                   June 30,           December 31,

                                                 2018                2017
                                                 ----                ----

                                  Unaudited              Audited
                                  ---------              -------


    CURRENT ASSETS

       Cash and cash
        equivalents                             1,920               1,037

    Restricted bank
     deposits                                   1,314               1,063

    Trade
     receivable, net                           15,633              12,456

    Patents                                     5,283               5,283

    Other accounts
     receivable and
     prepaid
     expenses                                     531               2,698

    Inventories, net                            4,889               4,876
                                                -----               -----


    Total current
     assets                                    29,570              27,413
                                               ------              ------


    LONG-TERM ASSETS

    Severance pay
     funds                                        303                 319

    Deferred tax
     long term                                  4,591               4,505

    Customer
     Contracts                                  3,130               3,640

    Software and
     other IP                                   4,646               5,006

    Other Asset, net                            5,250               5,071

    Goodwill                                    7,026               7,026

    Property &
     equipment, net                               816               1,218
                                                  ---               -----

    Total long-term
     assets:                                   25,762              26,785


    Total Assets                               55,332              54,198
                                               ------              ------



    CURRENT LIABILITIES

        Short-term Bank credit                  1,113       738

    Trade payables                              4,295     5,838

    Employees and payroll accruals              5,171     4,910

    Related parties                               997        61

    Accrued expenses and other liabilities      4,614     3,739

    Deferred revenues ST                        1,074     1,511
                                                -----     -----

    Short-term liability for future earn-out    1,038     1,163
                                                -----     -----


    Total current liabilities                  18,302    17,960
                                               ------    ------


    LONG-TERM LIABILITIES


       Long-term bank loan                          0         0

       Accrued severance pay                      558       585

       Related Parties                          2,980     2,082

    Deferred tax liability                         39        49

    Deferred revenues                             802       668

    Long-term liability for future earn-out       114       147


    Total long-term liabilities                 4,493     3,531
                                                -----     -----


    SHAREHOLDERS' EQUITY:

    Ordinary shares                             1,026     1,026

    Additional paid-in capital                 82,274    82,157

    Accumulated deficit                      (50,763) (50,476)
                                              -------   -------


    Total shareholders' equity                 32,537    32,707
                                               ------    ------


    Total liabilities and equity               55,332    54,198
                                               ------    ------


                                              SUPERCOM LTD.
                                              -------------

                                  CONSOLIDATED STATEMENTS OF OPERATIONS
                                  -------------------------------------

                                       (U.S. dollars in thousands)



                                       3 months ended




                                                                    June 30            June 30
                                                                                  2018               2017
                                                                                  ----               ----

                                          Unaudited                Unaudited
                                          ---------                ---------


    REVENUES                                                                     6,761              7,502

    COST OF REVENUES                                                             2,927              4,071
                                                                                 -----              -----


    GROSS PROFIT (LOSS)                                                          3,834              3,431
                                                                                 -----              -----


    OPERATING EXPENSES:

       Research and development                                                  1,203              1,960

       Selling and marketing                                                     1,481              2,337

       General and administrative                                                1,254              1,516

       Other expense (Income)                                                      133            (1,917)
                                                                                   ---             ------


    Total operating expenses                                                     4,071              3,896
                                                                                 -----              -----


    OPERATING LOSS                                                               (237)             (465)

    FINANCIAL INCOME (EXPENSES),
     NET                                                                           226              (226)
                                                                                   ---               ----


    LOSS BEFORE INCOME TAX                                                        (11)             (691)

    INCOME TAX BENEFIT (EXPENSES
     )                                                                              44                 30
                                                                                   ---                ---


    NET PROFIT(LOSS) FOR THE
     PERIOD                                                                         33              (661)
                                                                                   ---               ----


    EPS Basic                                                                        0             (0.04)
                                                                                   ---              -----

    EPS Diluted                                                                      0             (0.04)
                                                                                   ---              -----

    Weighted average number of
     ordinary shares  used in
     computing basic income per
     share                                                                  14,958,339         14,938,339




    Weighted average number of
     ordinary shares  used in
     computing diluted income
     per share                                                              15,011,129         15,012,263


                                                     SUPERCOM LTD.
                                                     -------------

                       Reconciliation Table of GAAP to Non-GAAP Figures and EBITDA to Net Income
                       -------------------------------------------------------------------------

                                  (U.S. dollars in thousands, except per share data)


                                                   3 months ended




                                                                          June 30,               June 30,
                                                                                    2018                    2017
                                                                                    ----                    ----

                                                      Unaudited           Unaudited
                                                      ---------           ---------


    GAAP gross profit                                                              3,834                   3,431

        Amortization of Software and
         IP                                                                          153                     152

        Stock-based compensation
         expenses                                                                     18                      64
                                                                                     ---                     ---

    Non-GAAP gross profit                                                          4,005                   3,647
                                                                                   -----                   -----


    GAAP operating Loss                                                            (237)                  (465)

      Amortization of Software/
       IP, Customer Contracts and
       Brand, and Stock-based
       compensation expenses                                                         761                     671

      Foreign Currency Loss                                                          342                     478

    Non-GAAP operating
     Income(Loss)                                                                    866                     684
                                                                                     ---                     ---


    GAAP net PROFIT (Loss)                                          33     (661)

      Amortization of Software/
       IP, Customer Contracts
       and Brand, and Stock-
       based compensation
       expenses                                                    761       671

        Foreign Currency Loss                                      342       478

        Income tax expense
         (benefit)                                                (44)     (30)
                                                                   ---       ---

    Non-GAAP net Profit(Loss)                                    1,092       458
                                                                 -----       ---


    Non-GAAP EPS                                                  0.07      0.03
                                                                  ----      ----


    NET PROFIT )LOSS( FOR THE
     PERIOD                                                         33     (661)

        Income tax expenses
         (benefit), net                                           (44)     (30)

        Financial expenses
         (income), net                                           (226)      226

        Depreciation,
         amortization and stock-
         based compensation
         expenses                                                1,298     1,012

        Foreign Currency Lossncy
         (benefit)20F annual
         report. k out the
         APAC.om ssing                                             342       478

    EBITDA *                                                     1,403     1,025
                                                                 -----     -----

    * EBITDA is a non-GAAP financial measure generally defined as earnings
     before interest, taxes, depreciation and amortization.


                                     SUPERCOM LTD.
                                     -------------

                         CONSOLIDATED STATEMENTS OF OPERATIONS
                         -------------------------------------

                              (U.S. dollars in thousands)



                                   6 months ended




                                                           June 30        June 30
                                                                     2018             2017
                                                                     ----             ----

                                      Unaudited           Unaudited
                                      ---------           ---------


    REVENUES                                                       13,775           15,829

    COST OF
     REVENUES                                                       6,054            9,356
                                                                    -----            -----


    GROSS PROFIT
     (LOSS)                                                         7,721            6,473
                                                                    -----            -----


    OPERATING
     EXPENSES:

       Research and
        development                                                 2,544            3,641

       Selling and
        marketing                                                   3,182            4,271

       General and
        administrative                                              2,602            3,191

       Other
        expenses(Income)                                              183          (2,317)
                                                                      ---           ------


    Total
     operating
     expenses                                                       8,511            8,786
                                                                    -----            -----


    OPERATING LOSS                                                  (790)         (2,313)

    FINANCIAL
     INCOME
     (EXPENSES),
     NET                                                              278            (402)
                                                                      ---             ----


    LOSS BEFORE
     INCOME TAX                                                     (512)         (2,715)

    INCOME TAX
     BENEFIT
     )EXPENSES(                                                       225               58
                                                                      ---              ---


    NET LOSS FOR
     THE PERIOD                                                     (287)         (2,657)
                                                                     ----           ------


                                                       SUPERCOM LTD.
                                                       -------------

                         Reconciliation Table of GAAP to Non-GAAP Figures and EBITDA to Net Income
                         -------------------------------------------------------------------------

                                     (U.S. dollars in thousands, except per share data)



                                                   6 months ended




                                                                             June 30,              June 30,
                                                                                         2018                   2017
                                                                                         ----                   ----

                                                      Unaudited              Unaudited
                                                      ---------             ---------


    GAAP gross profit                                                                   7,721                  6,473

        Amortization of Software and
         IP                                                                               307                    306

        Stock-based compensation
         expenses                                                                          59                    117
                                                                                          ---                    ---

    Non-GAAP gross profit                                                               8,087                  6,896
                                                                                        -----                  -----


    GAAP operating Loss                                                                 (790)               (2,313)

      Amortization of Software/
       IP, Customer Contracts and
       Brand, and Stock-based
       compensation expenses                                                             1816                  1,581

      Foreign Currency Loss                                                               787                    679

    Non-GAAP operating
     Income(Loss)                                                                       1,813                   (53)
                                                                                        -----                    ---


    GAAP net Income (Loss)                                       (287)    (2,657)

      Amortization of Software/
       IP, Customer Contracts
       and Brand, and Stock-
       based compensation
       expenses                                                  1,816       1,581

      Foreign Currency Loss                                        787         679

        Income tax expense
         (benefit)                                               (225)       (58)
                                                                  ----         ---

    Non-GAAP net Income(Loss)                                    2,091       (455)
                                                                 -----        ----


    Non-GAAP EPS                                                  0.14      (0.03)
                                                                  ----       -----


    NET LOSS FOR THE PERIOD                                      (287)    (2,657)

        Income tax expenses
         (benefit), net                                          (225)       (58)

        Financial expenses
         (income), net                                           (278)        402

        Depreciation,
         amortization and stock-
         based compensation
         expenses                                                2,886       2,326

        Foreign Currency Loss                                      787         679

    EBITDA *                                                     2,883         692
                                                                 -----         ---

    * EBITDA is a non-GAAP financial measure generally defined as earnings
     before interest, taxes, depreciation and amortization.

SuperCom Corporate Contact:
Ordan Trabelsi, President, Americas
Tel: 1-212-675-4606
ordan@supercom.com

View original content:http://www.prnewswire.com/news-releases/supercom-reports-significant-improvements-in-gross-profit-earnings-and-eps-with-1-4-million-in-ebitda-for-q2-2018--300695912.html

SOURCE SuperCom