SuperCom Reports Financial Results for the Third Quarter of 2018 With $1.8 Million in EBITDA, 30% EBITDA Margin, and Non-GAAP EPS $0.09
HERZLIYA, Israel, Nov, 14, 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 third quarter of 2018.
Nine Months Ended September 30, 2018 Financial Highlights (Compared to the Prior Year Period)
-- Revenue decreased to $19.9 million from $25.5 million.
-- Gross Profit decreased $11.1 million from 11.6 million.
-- Non-GAAP Gross Margin increased to 56% from 45.5%.
-- Non-GAAP core operating expenses improved by 34% to $9.4 million from
$14.3 million.
-- EBITDA improved to $4.7 million compared to $3.3 million.
-- Non-GAAP Net Profit improved to $3.5 million or $0.23 per share from
$2.1 million or $0.14 per share.
-- Working Capital increased to $18.6 million from $15.9 million.
-- Current Ratio increased to 2.5 from 2
Third Quarter 2018 Financial Highlights (Compared to the Third Quarter of 2017)
-- Revenue decreased to $6.1 million from $9.6 million.
-- Non-GAAP Gross Margin increased to 58.8% from 48%.
-- Non-GAAP core operating expenses improved by 41% to $2.5 million from
$4.2 million.
-- EBITDA decreased to $1.8 million compared to $2.4 million.
-- EBITDA Margin increased to 30% compared to 25%.
-- Non-GAAP Net Profit decreased to $1.4 million or $0.09 per share from $2
million or $0.14 per share.
Management Commentary
"We are excited to share our third quarter 2018 results, representing our very hard work optimizing our operational cost structure to record levels since 2015 with EBITDA margins as high as 30% and quarterly core Non-GAAP operating expenses as low as $2.5 million," commented Arie Trabelsi, President and CEO of SuperCom. "We have also been successful in securing a $20 million credit facility from a large US investment management firm, allowing us to grow our working capital to properly deploy our numerous ongoing multi-year projects as well as signal to potential customers and partners that we have capacity to do even more."
"With a steady base of recurring revenues globally, a growing targeted pipeline of opportunities across our three business segments, a lean operating cost structure, and strong financial backing, we are poised to grow our top line and cash flow generation in 2019 and in years to come," concluded Mr. Trabelsi.
First Three Quarters of 2018 and Recent Operational Highlights:
General:
-- Secured a $20 million credit facility from funds managed by affiliates
of Fortress Investment Group LLC, a highly diversified global investment
manager with approximately $41.4 billion of assets under management. The
facility is expected mainly to help support working capital and growth
of the business operations.
-- Reached a record low operating expense structure since 2015 with core
Non-GAAP operating expenses of approximately $2.5 million in Q3 2018,
providing a lean operating base for continued profitability.
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, an additional
national EM project win in Sweden.
-- In November 2018, secured an additional contract to provide PureSecurity
EM Suite in Minnesota and surrounding regions.
-- Continued progress on 13 EM project deployments, including those in
Europe, Canada and the USA.
Cyber Security:
-- Safend continued to close deals with sizable enterprise customers in
various locations globally, each with orders above $100 thousand in
value.
-- 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.
SuperCom management will host the conference call, followed by a question and answer period.
Date: Wednesday, November 14, 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, 2017. 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.
SUPERCOM LTD.
CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
September 30,
December 31,
2018 2017
Unaudited
Audited
---
CURRENT ASSETS
Cash and cash equivalents 1,786 1,037
Restricted bank deposits 1,291 1,063
Trade receivable, net 17,724 12,456
Patents 5,283 5,283
Other accounts receivable and prepaid expenses 543 2,698
Inventories, net 4,825 4,876
Total current assets 31,452 27,413
LONG-TERM ASSETS
Severance pay funds 306 319
Deferred tax long term 4,888 4,505
Customer Contracts 2,873 3,640
Software and other IP 4,456 5,006
Other Asset, net 5,447 5,071
Goodwill 7,026 7,026
Property & equipment, net 896 1,218
Total long-term assets: 25,892 26,785
Total Assets 57,344 54,198
CURRENT LIABILITIES
Short-term Bank credit 0 738
Trade payables 3,055 5,838
Employees and payroll accruals 4,106 4,910
Related parties 187 61
Accrued expenses and other liabilities 3.517 3,739
Deferred revenues ST 970 1,511
Short-term liability for future earn-out 1,039 1,163
Total current liabilities 12,874 17,960
LONG-TERM LIABILITIES
Long-term bank loan 0 0
Long-term loan 5,000 0
Accrued severance pay 563 585
Related Parties 3,825 2,082
Deferred tax liability 0 49
Deferred revenues 796 668
Long-term liability for future earn-out 95 147
Total long-term liabilities 10,279 3,531
SHAREHOLDERS' EQUITY:
Ordinary shares 1,026 1,026
Additional paid-in capital 83,810 82,157
Accumulated deficit (50,646) (50,476)
Total shareholders' equity 34,191 32,707
Total liabilities and equity 57,344 54,198
SUPERCOM LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands)
3 months ended
September September
30, 2018
30, 2017
---
Unaudited Unaudited
---
REVENUES 6,082 9,638
COST OF REVENUES 2,676 4,512
GROSS PROFIT (LOSS) 3,406 5,126
OPERATING EXPENSES:
Research and development 1,034 1,695
Selling and marketing 1,050 1,724
General and administrative 1,075 1,202
Other expense (Income) (31) (87)
Total operating expenses 3,128 4,534
OPERATING INCOME 278 592
FINANCIAL INCOME (EXPENSES), NET (348) (31)
INCOME BEFORE INCOME TAX (70) 561
INCOME TAX BENEFIT (EXPENSES) 188 53
NET PROFIT(LOSS) FOR THE PERIOD 118 614
EPS Basic 0.01 0.04
EPS Diluted 0.01 0.04
Weighted average number of ordinary shares used in computing 14,980,006 14,938,339
basic income per share
Weighted average number of ordinary shares used in computing 15,028,339 15,017,308
diluted income per share
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
September September
30, 2018
30, 2017
---
Unaudited Unaudited
---
GAAP gross profit 3,406 5.126
Amortization of Software and IP 153 154
Stock-based compensation expenses 19 36
Non-GAAP gross profit 3,578 5,316
GAAP operating Income 278 592
Amortization of Software/IP, Customer
Contracts and Brand, and Stock- 1081 1053
based compensation expenses
Foreign Currency Loss 367 429
Non-GAAP operating Income 1,726 2,074
GAAP net PROFIT 118 614
Amortization of Software/IP, Customer
Contracts and Brand, and Stock- 1081 1053
based compensation expenses
Foreign Currency Loss 367 429
Income tax expense (benefit) (188) (53)
Non-GAAP net Profit(Loss) 1,378 2,043
Non-GAAP EPS 0.09 0.14
NET PROFIT FOR THE PERIOD 118 614
Income tax expenses (benefit), net (188) (53)
Financial expenses (income), net 348 31
Depreciation, amortization and stock-
based compensation expenses 1,169 1,398
Foreign Currency Loss 367 429
EBITDA * 1,814 2.419
---
* 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)
9 months ended
September September
30, 2018
30, 2017
---
Unaudited Unaudited
---
REVENUES 19,857 25,467
COST OF REVENUES 8,730 13,868
---
GROSS PROFIT (LOSS) 11,127 11,599
---
OPERATING EXPENSES:
Research and development 3,578 5,336
Selling and marketing 4,232 5,995
General and
administrative 3,677 4,393
Other expenses(Income) 152 (2,404)
---
Total operating expenses 11,639 13,320
---
OPERATING LOSS (512) (1,721)
FINANCIAL INCOME
(EXPENSES), NET (70) (433)
---
LOSS BEFORE INCOME TAX (582) (2,154)
INCOME TAX BENEFIT 413 111
---
NET LOSS FOR THE PERIOD (169) (2,043)
---
SUPERCOM LTD.
Reconciliation Table of GAAP to Non-GAAP Figures and EBITDA to Net Income
(U.S. dollars in thousands, except per share data)
9 months ended
September September
30, 2018
30, 2017
---
Unaudited Unaudited
---
GAAP gross profit 11,127 11.599
Amortization of Software and IP 460 460
Stock-based compensation expenses 78 153
Non-GAAP gross profit 11,665 12,212
GAAP operating Loss (512) (1,721)
Amortization of Software/IP, Customer
Contracts and Brand, and Stock- 2,897 2,883
based compensation expenses
Foreign Currency Loss 1,154 1,330
Non-GAAP operating Income(Loss) 3,539 2,492
GAAP net Income (Loss) (169) (2,043)
Amortization of Software/IP, Customer
Contracts and Brand, and Stock- 2,897 2,883
based compensation expenses
Foreign Currency Loss 1,154 1330
Income tax expense (benefit) (413) (111)
Non-GAAP net Income(Loss) 3,469 2,059
Non-GAAP EPS 0.23 0.14
NET LOSS FOR THE PERIOD (169) (2,043)
Income tax expenses (benefit), net (413) (111)
Financial expenses (income), net 70 433
Depreciation, amortization and stock-
based compensation expenses 4,055 3,673
Foreign Currency Loss 1,154 1,330
EBITDA * 4,697 3,282
---
* 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-financial-results-for-the-third-quarter-of-2018-with-1-8-million-in-ebitda-30-ebitda-margin-and-non-gaap-eps-0-09--300750260.html
SOURCE SuperCom
