Pointer Telocation Reports Third Quarter 2018 Financial Results
ROSH HAAYIN, Israel, Nov. 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 third quarter and nine months ended September 30, 2018.
Financial Highlights for Third Quarter 2018 Compared to Third Quarter 2017
-- Total revenues of $18.7 million, down 7% as reported due to foreign currency exchange headwinds and up 1% on a constant currency basis -- Service revenues of $12.8 million, down 4% as reported and up 8% on a constant currency basis -- Operating income of $2.5 million (13% of revenue), down 13% -- Net income of $1.8 million, down 4% -- Cash, net of debt, totaled $2 million. Generated $3.1 million in operating cash flow during the quarter -- Total subscribers reached 274,000, an increase of 10%
Financial Highlights for First Nine Months of 2018 Compared to First Nine Months of 2017
-- Total revenues of $59.4 million as reported, up from $59.3 million, and up 4% on a constant currency basis -- Service revenues of $39.8 million, up 3% as reported, and up 9% on a constant currency basis -- Operating income of $7.8 million (13% of revenue), down 2% -- Net income of $5.5 million, up 1%
Management Commentary
David Mahlab, Pointer's Chief Executive Officer, commented:
"This was another solid quarter for Pointer. We delivered improved service margins, strong earnings and impressive cash flow generation while facing tough headwinds from foreign currency exchange rates in our markets in Latin America, which negatively impacted reported revenue. Our bottom line performance is good, and it demonstrates our underlying strength.
"During the period, we continued to advance our capabilities in the IOT space and in providing our safety and driver behavior solution through our machine learning technology. Our platform will harness our real-time driver data to deliver more efficient, cost-effective products and services to our customers, many of whom have already provided positive initial feedback on these upcoming offerings. Initial introduction of the solution has been well received by our customers. We are also currently beta testing our asset tracking solution in North America and intend to start shipping before the end of the year.
"As reported recently, in India, we have been officially certified to the AIS 140 standard, which we believe will drive a substantial increase in telematics adoption in this growing market. We expect to start delivering Cello CANiQ IN devices in India by the end of the year, and we should benefit from deliveries in the Americas as well. We expect a significant ramp up in North America in 2019 and beyond. Meanwhile, in Brazil we secured several new contracts during the third quarter that will have an impact in 2019 as well.
"Our markets, while highly fragmented, continue to expand, and we are positioned around the globe to pursue them."
Yaniv Dorani, Pointer's Chief Financial Officer, commented:
"During the period, we continued to strengthen our balance sheet and improve our capital structure. In the third quarter, we generated $3.1 million in operating cash flow and ended the quarter with $2.0 million in net cash, achieving positive net cash for the first time in more than a decade. Over the past nine months, we have reduced our long-term debt by $3.8 million."
Third Quarter 2018 Financial Summary Compared to Third Quarter 2017 (in millions, except per share amounts) Q3/2018 Q3/2017 --- --- Total Revenues $18.7 $20.2 --- Service Revenues $12.8 $13.3 --- Operating Income (% of Revenue) $2.5 (13%) $2.9 (14%) --- --- Diluted EPS $0.22 $0.23 --- Non- GAAP Diluted EPS $0.31 $0.28 --- EBITDA $3.1 $3.6 ---
First Nine Months of 2018 Financial Summary Compared to First Nine Months of 2017 (in millions, except per share amounts) 1-9/2018 1-9/2017 --- --- Total Revenues $59.4 $59.3 --- Service Revenues $39.8 $38.6 --- Operating Income (% of Revenue) $7.8 (13%) $8.0 (13%) --- --- Diluted EPS $0.67 $0.67 --- Non-GAAP Diluted EPS $0.91 $0.89 --- EBITDA $9.8 $10.1 ---
Revenues from services decreased 4% as reported to $12.8 million as compared to $13.3 million in the third quarter of 2017. In local currency terms, revenues from services increased by 8%. Revenues from products decreased 14% as reported in the third quarter of 2018 to $5.9 million from $6.9 million. In local currency terms, revenues from products decreased by 11%. The currency exchange rate impact on total revenues for the third quarter of 2018 compared to the third quarter of 2017 was approximately $1.8 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.
The call will also be accompanied by a live webcast over the Internet and accessible at http://public.viavid.com/index.php?id=131448.
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 Non-GAAP 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 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, the Company's strength, adoption of the Company's solutions and other trends in the markets and various territories, 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 September 30, December 31, 2018 2017 Unaudited ASSETS CURRENT ASSETS: Cash and cash equivalents 8,315 7,375 Trade and unbilled receivables 12,527 13,660 Other accounts receivable and prepaid expenses 3,349 2,865 Inventories 6,217 6,551 Total current assets 30,408 30,451 LONG-TERM ASSETS: Long-term loan to related party 968 973 Long-term unbilled and other accounts receivable 1,290 1,116 Severance pay fund 3,184 3,546 Property and equipment, net 5,756 5,848 Other intangible assets, net 1,299 1,935 Goodwill 38,246 41,010 Deferred tax asset 8,323 9,585 Total long-term assets 59,066 64,013 Total assets 89,474 94,464
INTERIM CONSOLIDATED BALANCE SHEETS --- U.S. dollars in thousands September 30, December 31, 2018 2017 Unaudited LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short-term bank credit and current maturities of long-term 3,249 5,101 loans Trade payables 5,353 6,204 Deferred revenues and customer advances 709 777 Other accounts payable and accrued expenses 7,728 9,117 Total current liabilities 17,039 21,199 --- LONG-TERM LIABILITIES: Long-term loans from banks 3,048 5,015 Deferred taxes and other long-term liabilities 416 838 Accrued severance pay 3,633 3,996 Total long term liabilities 7,097 9,849 --- COMMITMENTS AND CONTINGENT LIABILITIES EQUITY: Pointer Telocation Ltd.'s shareholders' equity: Share capital 6,049 5,995 Additional paid-in capital 129,895 129,076 Accumulated other comprehensive income (7,104) (2,340) Accumulated deficit (63,738) (69,597) Total Pointer Telocation Ltd.'s shareholders' equity 65,102 63,134 Non-controlling interest 236 282 Total equity 65,338 63,416 Total liabilities and equity 89,474 94,464
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS --- U.S. dollars in thousands, except for share and per share information Nine months ended Three months ended Year ended December 31, September 30, September 30, 2018 2017 2018 2017 2017 Unaudited Unaudited Revenues: Products 19,555 20,725 5,918 6,896 26,182 Services 39,798 38,579 12,812 13,336 51,973 Total revenues 59,353 59,304 18,730 20,232 78,155 --- Cost of revenues: Products 11,740 12,831 3,551 4,078 16,073 Services 16,309 16,294 5,160 5,673 21,914 Total cost of revenues 28,049 29,125 8,711 9,751 37,987 Gross profit 31,304 30,179 10,019 10,481 40,168 Operating expenses: Research and development 3,446 3,024 1,087 1,037 4,051 Selling and marketing 10,983 10,360 3,438 3,599 14,038 General and administrative 8,400 8,463 2,852 2,827 11,275 Amortization of intangible assets 367 339 119 112 463 One-time acquisition related costs 262 32 Total operating expenses 23,458 22,186 7,496 7,575 29,859 Operating income 7,846 7,993 2,523 2,906 10,309 Financial expenses, net 856 708 190 288 1,004 Other expenses (income) 13 (7) (2) (4) 5 Income before taxes on income 6,977 7,292 2,335 2,622 9,300 Taxes on income 1,481 1,877 531 739 (7,221) Net income 5,496 5,415 1,804 1,883 16,521 Earnings per share from continuing operations attributable to Pointer Telocation Ltd.'s shareholders: Basic net earnings per share 0.68 0.68 0.22 0.24 2.07 Diluted net earnings per share 0.67 0.67 0.22 0.23 2.03 Weighted average -Basic number of shares 8,088,700 7,977,376 8,131,988 7,989,398 7,997,684 Weighted average - fully diluted number of shares 8,273,532 8,104,756 8,274,676 8,172,362 8,130,566
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS --- U.S. dollars in thousands Nine months ended Three months ended Year ended September September 30, 30, December 31, 2018 2017 2018 2017 2017 Unaudited Unaudited Cash flows from operating activities: --- Net income 5,496 5,415 1,804 1,883 16,521 Adjustments required to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,939 2,142 593 691 2,924 Accrued interest and exchange rate changes of 7 (18) 52 debenture and long-term loans Accrued severance pay, net 15 134 (30) 22 93 Gain from sale of property and equipment, net (73) (85) (24) (18) (113) Stock-based compensation 792 299 406 83 380 Decrease (increase) in trade and unbilled 69 (2,271) 857 (144) (1,616) receivables, net Decrease (increase) in other accounts (1,039) (569) 330 (89) (206) receivable and prepaid expenses Decrease (increase) in inventories 1,017 (807) 266 (240) (1,170) Decrease (increase) in deferred income taxes 616 1,096 276 274 (8,018) Decrease (increase) in long-term unbilled and (99) 4 103 (48) 165 other accounts receivable Decrease in trade payables (479) (1,558) (726) (347) (1,597) Increase (decrease) in other accounts payable (1,095) 2,200 (713) 1,206 2,285 and accrued expenses Net cash provided by operating activities 7,166 6,000 3,124 3,273 9,700 Cash flows from investing activities: --- Purchase of property and equipment (2,061) (1,987) (428) (875) (3,033) Purchase of other intangible assets (233) Proceeds from sale of property and equipment 72 86 23 31 114 Net cash used in investing activities (1,989) (1,901) (405) (844) (3,152)
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS --- U.S. dollars in thousands Nine months ended Three months ended Year ended December 31, September September 30, 30, 2018 2017 2018 2017 2017 Unaudited Unaudited Cash flows from financing activities: --- Repayment of long-term loans from banks (3,810) (3,369) (1,165) (1,356) (4,875) Proceeds from issuance of shares and exercise of 80 387 111 395 options, net of issuance costs Short-term bank credit, net (41) (305) (120) (3) (231) Net cash used in financing activities (3,771) (3,287) (1,285) (1,248) (4,711) Effect of exchange rate on cash and cash equivalents (466) 126 (287) 123 (528) Decrease in cash and cash equivalents 940 938 1,147 1,304 1,309 Cash and cash equivalents at the beginning of the period 7,375 6,066 7,168 5,700 6,066 Cash and cash equivalents at the end of the period 8,315 7,004 8,315 7,004 7,375
ADDITIONAL INFORMATION --- U.S. dollars in thousands, except share and per share data The following table reconciles GAAP to non-GAAP operating results: Nine months ended Three months ended Year ended September September 30, 30, December 31, 2018 2017 2018 2017 2017 GAAP gross profit 31,304 30,179 10,019 10,481 40,168 Stock-based compensation expenses 65 2 32 1 3 Non-GAAP gross profit 31,369 30,181 10,051 10,482 40,171 GAAP operating income 7,846 7,993 2,523 2,906 10,309 Stock-based compensation expenses 792 299 406 83 380 Amortization and impairment of long lived assets 367 339 119 112 463 Other expenses of retirement costs 125 125 Acquisition related one-time costs 262 154 Non-GAAP operating income 9,267 8,756 3,048 3,101 11,431 GAAP net income 5,496 5,415 1,804 1,883 16,521 Stock-based compensation expenses 792 299 406 83 380 Amortization and impairment of long lived assets 367 339 119 112 463 Other expenses of retirement costs 125 125 Non cash tax expenses 613 1,030 238 229 (8,213) Acquisition related one-time costs 262 154 Non-GAAP net income 7,530 7,208 2,567 2,307 9,430 Non-GAAP net income per share from continuing 0.91 0.89 0.31 0.28 1.16 operations - Diluted Non-GAAP weighted average number of shares - Diluted* 8,273,532 8,104,756 8,274,676 8,172,362 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 Nine months ended Three months ended Year ended December 31, September September 30, 30, 2018 2017 2018 2017 2017 GAAP Net income as reported: 5,496 5,415 1,804 1,883 16,521 Financial expenses, net 856 708 190 288 1,004 Tax on income 1,481 1,877 531 739 (7,221) Depreciation, amortization and impairment of 1,939 2,142 2,924 goodwill and intangible assets 593 691 EBITDA 9,772 10,142 3,118 3,601 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
View original content to download multimedia:http://www.prnewswire.com/news-releases/pointer-telocation-reports-third-quarter-2018-financial-results-300751108.html
SOURCE Pointer Telocation Ltd.