Pointer Telocation Reports Second Quarter 2018 Financial Results

ROSH HAAYIN, Israel, Aug. 15, 2018 /PRNewswire/ -- 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 its financial results for second quarter and six months ended June 30, 2018.

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Financial Highlights for Second Quarter 2018 Compared to Second Quarter 2017

    --  Total revenue of $19.7 million, down 1% due to foreign currency exchange
        headwinds
    --  Service revenues of $13.2 million, up 2%
    --  Operating income of $2.8 million (14% of revenue), unchanged from the
        prior-year period
    --  Net income of $1.9 million, down 2% due to foreign currency exchange
        headwinds
    --  EBITDA of $3.4 million, unchanged from the prior-year period
    --  Net debt of $0.4 million
    --  Total subscribers reached 271,000, an increase of 13% year-over-year

Financial Highlights for First Half of 2018 Summary Compared to First Half 2017

    --  Total revenue of $40.6 million, up 4%
    --  Service revenues of $27.0 million, up 7%
    --  Operating income of $5.3 million (13% of revenue), up 5% from $5.1
        million
    --  Net income of $3.7 million, up 5% from $3.5 million
    --  EBITDA of $6.7 million, up 2% from $6.5 million

Management Comment

David Mahlab, Pointer's Chief Executive Officer, commented:

"This was a solid quarter, as we increased our service revenue despite headwinds from currency exchange rates, and we delivered double-digit operating margins and strong earnings.

"During the period, we continued to advance our capabilities in predicting driver behavior through our machine learning technology. We are building a platform that will harness our real-time driver data to deliver more efficient, cost-effective products and services to our customers. Our markets are expanding, particularly in the Americas, and we are positioned to pursue these opportunities."

Second Quarter 2018 Financial Summary Compared to Second Quarter 2017


    (in millions, except per
     share amounts)                    June 30, 2018         June 30, 2017
    ------------------------           -------------         -------------

    Total Revenues                                $19.7                  $20.0
    --------------                                -----                  -----

    Service Revenues                              $13.1                  $12.9
    ----------------                              -----                  -----

    Operating Income (% of
     Revenue)                                $2.8 (14%)           $2.8 (14%)
    ----------------------                    ---------             ---------

    Diluted Earnings per Share
     (EPS)                                        $0.23                  $0.24
    --------------------------                    -----                  -----

    Non-GAAP Diluted EPS                          $0.31                  $0.32
    --------------------                          -----                  -----

    EBITDA                                         $3.4                   $3.4
    ------                                         ----                   ----

First Half 2018 Financial Summary Compared to First Half 2017


    (in millions, except per
     share amounts)                    June 30, 2018         June 30, 2017
    ------------------------           -------------         -------------

    Total Revenues                                $40.6                  $39.1
    --------------                                -----                  -----

    Service Revenues                              $27.0                  $25.2
    ----------------                              -----                  -----

    Operating Income (% of
     Revenue)                                $5.3 (13%)           $5.1 (13%)
    ----------------------                    ---------             ---------

    Basic and Diluted Earnings
     per Share (EPS)                              $0.46                  $0.44
    --------------------------                    -----                  -----

    Non-GAAP Diluted EPS                          $0.60                  $0.61
    --------------------                          -----                  -----

    EBITDA                                         $6.7                   $6.5
    ------                                         ----                   ----

Revenues from services increased 2% to $13.1 million as compared to $12.9 million in the second quarter of 2017 due to subscriber growth. In local currencies terms, revenues increased by 8%. Revenues from products in the second quarter of 2018 declined to $6.6 million from $7.1 million in the second quarter of 2017. The currency exchange rate impact on total revenue for the second quarter of 2018 was approximately $1 million; the currency exchange rate impact on operating income was approximately $0.1 million.

Conference Call Information

As previously announced, Pointer Telocation's management will host a conference call today, at 10:00 a.m. Eastern Time, 3:00 p.m. UK time, 17:00 p.m. 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 +1-877-407-0789 or 1-201-689-8562
From Israel 1-809-406-247
From the UK 0-800-756 -3429

A replay will be available a few hours following the call on the company's website for one year.

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, Non-GAAP operating income and net income as Non-GAAP financial performance measurements.

Pointer calculates EBITDA by adding back to net income financial expenses, taxes and depreciation and amortization of intangible assets.

Pointer calculates Non-GAAP operating income by adding back to operating income the effects of non-cash stock based compensation expenses, amortization of long lived assets, other expenses of retirement costs and losses and acquisition related one-time costs.

Pointer calculates Non-GAAP net income by adding back to net income the effects of non-cash stock based compensation expenses, amortization 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 operating and net income are provided to investors to complement the results provided in accordance with GAAP, as management believes these measures help to illustrate underlying operating trends in the Company's business and uses these measures 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 operating and 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 profitability.

For more information, please visit http://www.pointer.com, the content of which does not form a part of this press release.

Risks Regarding Forward Looking Statements

Certain statements made herein that use words such as "estimate," "project," "intend," "expect," "'believe", "may", "might", "predict", "potential", "anticipate", "plan" or similar expressions are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. For example, when the Company discusses its platform that will harness its real-time driver data to deliver better products and services, trends in the markets and various territories as well as the future of the car industry and future opportunities, it is using forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties that could cause the actual results, performance or achievements of the Company to be materially different from those that may be expressed or implied by such statements, including, among others, changes in general economic and business conditions. For additional information regarding these and other risks and uncertainties associated with the Company's business, reference is made to the Company's reports filed from time to time with the U.S. Securities and Exchange Commission. The Company does not undertake to revise or update any forward-looking statements for any reason.


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

    U.S. dollars in thousands


                                          June 30,         December 31,
                                                      2018                2017
                                                      ----                ----

                                          Unaudited
                                          ---------

    ASSETS


    CURRENT ASSETS:

    Cash and cash equivalents                        7,168               7,375

    Trade and unbilled receivables                  13,657              13,660

    Other accounts receivable and prepaid
     expenses                                        3,692               2,865

    Inventories                                      5,621               6,551


    Total current assets                            30,138              30,451
                                                    ------              ------



    LONG-TERM ASSETS:

    Long-term loan to related party                    949                 973

    Long-term unbilled and other accounts
     receivable                                      1,303               1,116

    Severance pay fund                               3,094               3,546

    Property and equipment, net                      5,670               5,848

    Other intangible assets, net                     1,458               1,935

    Goodwill                                        38,324              41,010

    Deferred tax asset                               8,515               9,585
                                                     -----               -----


    Total long-term assets                          59,313              64,013
                                                    ------              ------


    Total assets                                    89,451              94,464
                                                    ======              ======


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

    U.S. dollars in thousands


                                        June 30,           December 31,

                                                      2018                   2017
                                                      ----                   ----

                                        Unaudited
                                        ---------

    LIABILITIES AND SHAREHOLDERS'
     EQUITY


    CURRENT LIABILITIES:

    Short-term bank credit and
     current maturities of long-
     term loans                                      4,154                  5,101

    Trade payables                                   5,609                  6,204

    Deferred revenues and customer
     advances                                          761                    777

    Other accounts payable and
     accrued expenses                                8,248                  9,117


    Total current liabilities                       18,772                 21,199
    -------------------------                       ------                 ------



    LONG-TERM LIABILITIES:

    Long-term loans from banks                       3,421                  5,015

    Deferred taxes and other long-
     term liabilities                                  355                    838

    Accrued severance pay                            3,572                  3,996


    Total long term liabilities                      7,348                  9,849
    ---------------------------                      -----                  -----


    COMMITMENTS AND CONTINGENT
     LIABILITIES


    EQUITY:

    Pointer Telocation Ltd.'s
     shareholders' equity:

    Share capital                                    6,049                  5,995

    Additional paid-in capital                     129,489                129,076

    Accumulated other
     comprehensive income                          (6,907)               (2,340)

    Accumulated deficit                           (65,544)              (69,597)
                                                   -------                -------


    Total Pointer Telocation
     Ltd.'s shareholders' equity                    63,087                 63,134
                                                    ------                 ------


    Non-controlling interest                           244                    282
                                                       ---                    ---


    Total equity                                    63,331                 63,416
                                                    ------                 ------


    Total liabilities and equity                    89,451                 94,464
                                                    ======                 ======


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

    U.S. dollars in thousands, except for share and per share information


                                                                            Six months ended           Three months ended        Year ended

                                                                                June 30,                    June 30,            December 31,

                                                                               2018               2017                  2018      2017            2017
                                                                               ----               ----                  ----      ----            ----

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

    Revenues:

    Products                                                                 13,637             13,829                 6,578     7,147          26,182

    Services                                                                 26,986             25,243                13,162    12,894          51,973
                                                                             ------             ------                ------    ------          ------


    Total revenues                                                           40,623             39,072                19,740    20,041          78,155
    --------------                                                           ------             ------                ------    ------          ------


    Cost of revenues:

    Products                                                                  8,188              8,753                 3,963     4,477          16,073

    Services                                                                 11,148             10,621                 5,438     5,258          21,914


    Total cost of revenues                                                   19,336             19,374                 9,401     9,735          37,987
                                                                             ------             ------                 -----     -----          ------


    Gross profit                                                             21,287             19,698                10,339    10,306          40,168
                                                                             ------             ------                ------    ------          ------


    Operating expenses:

    Research and development                                                  2,359              1,987                 1,122     1,017           4,051

    Selling and marketing                                                     7,545              6,761                 3,677     3,456          14,038

    General and administrative                                                5,548              5,634                 2,661     2,886          11,275

    Amortization of intangible assets                                           248                226                   121       113             463

    One-time acquisition related costs                                          262                  -                    -        -             32


    Total operating expenses                                                 15,962             14,608                 7,581     7,472          29,859
                                                                             ------             ------                 -----     -----          ------


    Operating income                                                          5,325              5,090                 2,758     2,834          10,309

    Financial expenses, net                                                     666                419                   332       259           1,004

    Other expenses                                                               15                  -                    -        -              5
                                                                                ---                ---                  ---      ---            ---


    Income before taxes on income                                             4,644              4,671                 2,426     2,575           9,300

    Taxes on income                                                             950              1,138                   501       609         (7,221)
                                                                                ---              -----                   ---       ---          ------


    Net income                                                                3,694              3,533                 1,925     1,966          16,521
                                                                              =====              =====                 =====     =====          ======



    Earnings per share from continuing
      operations attributable to Pointer
      Telocation Ltd.'s shareholders:

    Basic net earnings per share                                               0.46               0.44                  0.24      0.24            2.07
                                                                               ====               ====                  ====      ====            ====


    Diluted net earnings per share                                             0.44               0.44                  0.23      0.24            2.03
                                                                               ====               ====                  ====      ====            ====


    Weighted average - Basic number of shares                             8,066,698          7,942,957             8,073,665 7,978,102       7,997,684
                                                                          =========          =========             ========= =========       =========


    Weighted average - fully diluted number of shares                     8,257,968          8,070,953             8,294,562 8,111,119       8,130,566
                                                                          =========          =========             ========= =========       =========


    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,

                                                                                   2018                2017                 2018      2017                2017
                                                                                   ----                ----                 ----      ----                ----

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


    Cash flows from operating activities:
    -------------------------------------


    Net income                                                                    3,694               3,533                1,925     1,966              16,521

    Adjustments required to reconcile net income to
      net cash provided by operating activities:

    Depreciation and amortization                                                 1,345               1,451                  627       601               2,924

    Accrued interest and exchange rate changes of debenture and long-term loans      25                   -                  24         -                 52

    Accrued severance pay, net                                                       46                 112                 (32)       54                  93

    Gain from sale of property and equipment, net                                  (49)               (67)                (22)     (49)              (113)

     Stock-based compensation                                                       386                 217                  244       106                 380

    Decrease (increase) in trade and unbilled receivables, net                    (788)            (2,127)                 200   (1,202)            (1,616)

    Decrease (increase)  in other accounts receivable and prepaid expenses      (1,370)              (480)               (749)      131               (206)

    Decrease (increase) in inventories                                              751               (567)                 541     (418)            (1,170)

    Decrease (increase) in deferred income taxes                                    341                 822                  186       452             (8,018)

    Decrease (increase) in long-term unbilled and other accounts receivable       (202)                 52                (360)      123                 165

    Increase (decrease) in trade payables                                           247             (1,211)                 358     (732)            (1,597)

    Increase (decrease) in other accounts payable and accrued expenses            (382)                994              (1,214)      192               2,285


    Net cash provided by operating activities                                     4,044               2,729                1,728     1,224               9,700
                                                                                  -----               -----                                            -----


    Cash flows from investing activities:
    -------------------------------------

    Purchase of property and equipment                                          (1,633)            (1,112)               (674)    (344)            (3,033)

    Purchase of other intangible assets                                               -                  -                   -        -              (233)

    Proceeds from sale of property and equipment                                     49                  55                   22        37                 114


    Net cash used in investing activities                                       (1,584)            (1,057)               (652)    (307)            (3,152)
                                                                                 ------              ------                 ----      ----              ------


    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,

                                                                 2018                2017                 2018             2017                           2017
                                                                 ----                ----                 ----             ----                           ----

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


    Cash flows from financing activities:
    -------------------------------------


    Repayment of long-term loans from banks                   (2,645)            (2,013)             (1,294)         (1,063)                       (4,875)

    Proceeds from issuance of shares and exercise of options,      80                 276                   76              197                            395
      net of issuance costs

    Short-term bank credit, net                                    79               (302)                  21             (21)                         (231)


    Net cash used in financing activities                     (2,486)            (2,039)             (1,197)           (887)                       (4,711)
                                                               ------              ------               ------             ----                         ------


    Effect of exchange rate on cash and cash equivalents        (181)                  1                (477)            (84)                         (528)
                                                                 ----                 ---                 ----              ---                           ----


    Decrease in cash and cash equivalents                       (207)              (366)               (598)            (54)                         1,309

    Cash and cash equivalents at the beginning of the period    7,375               6,066                7,766            5,754                          6,066
                                                                -----               -----                -----            -----                          -----


    Cash and cash equivalents at the end of the period          7,168               5,700                      7,168                                           7,375

                                                                                                                                             5,700
                                                                                                                                             =====


    ADDITIONAL INFORMATION
    ----------------------

    U.S. dollars in thousands, except share and per share data


    The following table reconciles GAAP to non-GAAP operating results:


                                                                         Six months ended           Three months ended            Year ended

                                                                           June 30,                 June 30,             December 31,

                                                                            2018               2017                 2018           2017               2017
                                                                            ----               ----                 ----           ----               ----


    GAAP gross profit                                                     21,287             19,698               10,339         10,306             40,168

    Stock-based compensation expenses                                         33                  2                   24              1                  3
                                                                                                                   ---            ---

    Non-GAAP gross profit                                                 21,320             19,700               10,363         10,307             40,171
                                                                          ======             ======               ======         ======             ======



    GAAP operating income                                                  5,325              5,090                2,758          2,834             10,309

    Stock-based compensation expenses                                        386                217                  244            106                380

    Amortization and impairment of long lived assets                         248                226                  121            113                463

    Other expenses of retirement costs                                         -               125                    -             -               125

    Acquisition related one-time costs                                       262                  -                   -             -               154

    Non-GAAP operating income                                              6,222              5,658                3,123          3,053             11,431
                                                                           =====              =====                =====          =====             ======


    GAAP net income                                                        3,694              3,533                1,925          1,966             16,521

    Stock-based compensation expenses                                        386                217                  244            106                380

    Amortization and impairment of long lived assets                         248                226                  121            113                463

    Other expenses of retirement costs                                         -               125                    -             -               125

    Non cash tax expenses                                                    375                801                  204            415            (8,213)

    Acquisition related one-time costs                                       262                  -                   -             -               154
                                                                                                                   ---           ---

    Non-GAAP net income                                                    4,965              4,902                2,494          2,600              9,430


    Non-GAAP net income per share from continuing                           0.60                                   0.31                             1.16
      operations - Diluted
                                                                                              0.61                               0.32
                                                                                              ====                               ====

    Non-GAAP weighted average number of shares - Diluted*              8,257,968          8,070,953            8,294,562      8,111,119

                                                                                                                                             8,130,566

* 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
                                                      June 30,           Three months ended    Year ended
                                                                              June 30,        December 31,

                                                  2018              2017                2018  2017            2017
                                                  ----              ----                ----  ----            ----


    GAAP Net income as reported:                 3,694             3,533               1,925 1,966          16,521


    Financial expenses, net                        666               419                 332   259           1,004

    Tax on income                                  950             1,138                 501   609         (7,221)

    Depreciation, amortization and impairment of 1,345             1,451                                   2,924
      goodwill and  intangible assets
                                                                                       627   601
                                                                                       ---   ---


    EBITDA                                       6,655             6,541               3,385 3,435          13,228

Company contact:

Yaniv Dorani, CFO
Tel: +972-3-5723111
E-mail: yanivd@pointer.com

Investor Relations Contact at Hayden IR, LLC:

Brett Maas
Tel: +1-646-536-7331
E-mail: brett@haydenir.com

Dave Fore
Tel: +1-206-395-2711
E-mail: dave@haydenir.com

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SOURCE Pointer Telocation Ltd