Pointer Telocation Reports Results for the Full Year and the Fourth Quarter of 2018
ROSH HAAYIN, Israel, Feb. 28, 2019 /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 full year and fourth quarter ended December 31, 2018.
Financial Highlights for Full Year of 2018 Compared to Full Year of 2017
-- Total revenues of $77.8 million, similar as in previous year and up 5%
on a constant currency basis
-- Service revenues of $52.5 million, up 1% as reported and up 9% on a
constant currency basis
-- Operating income of $9.8 million (13% of revenue), down 5%
-- Net income of $6.9 million, down from $16.5 million. 2017 net income
included $9.2 million onetime income resulting from the realization of a
deferred tax asset
-- Non-GAAP net income of $9.6 million, up 2%
-- Adjusted EBITDA of $13.6 million same as in 2017
-- Cash, net of debt, totaled $3.5 million. Generated $8.6 million in
operating cash flow during the year
-- Total subscribers reached 276,000, an increase of 7%
Financial Highlights for Fourth Quarter 2018 Compared to Fourth Quarter 2017
-- Total revenues of $18.4 million as reported, down from $18.9 million as
reported, up 8% on a constant currency basis
-- Service revenues of $12.7 million, down from $13.4 million as reported,
up 8% on a constant currency basis
-- Operating income of $2.0 million (11% of revenue), down 15%
-- Net income of $1.4 million, down from $11.1 million. Fourth quarter 2017
net income included $9.2 million onetime income resulting from the
realization of a deferred tax asset
-- Non-GAAP net income of $2.1 million, down 5%
-- Adjusted EBITDA of $3.0 million, down 5%
Management Commentary
David Mahlab, Pointer's Chief Executive Officer, commented:
"The fourth quarter capped a solid year for Pointer, though we had currency exchange rate headwinds. In 2018, we strengthened our balance sheet, reversing the Company from a position of net debt to net cash, for the first time in more than a decade. Also, in the fourth quarter, we continued our trend of positive operating cash flow despite elevated investments in R&D and Sales and Marketing as planned in order to support our North America market expansion. Despite continued currency exchange headwinds, we delivered double-digit operating margin and positive earnings on both a GAAP and non-GAAP basis, demonstrating the leverage we have built into our operating model."
"In the year, we announced major wins of new contracts that will escalate our products sales in 2019. We focus on increasing our presence in the U.S. and we already started shipping new products to this market during the fourth quarter, and we expect deliveries to ramp this year to additional US based customers. Meanwhile, in Brazil, we secured several new service contracts in 2018 that will have an impact in the third and fourth quarters of 2019 as well. All of this should help us achieve our growth goals in 2019."
"Looking forward in 2019, we expect our markets and opportunities to continue to expand. We expect to see double-digit growth in our overall revenues, driven in part by 30% or greater product revenue growth in 2019 especially in the North American market"
Yaniv Dorani, Pointer's Chief Financial Officer, commented:
"In 2018, we continued to strengthen our balance sheet and improve our capital structure. In the fourth quarter, we generated $1.4 million in operating cash flow and ended the quarter with $3.5 million in net cash, continuing the trend of positive net cash from the previous quarter. In 2018, we reduced our debt by $5.1 million, and we remain on track for continued positive operating cash flow and long-term debt reduction in 2019."
Full Year 2018 Financial Summary Compared to Full Year 2017
(in millions,
except per share
amounts) 2018 2017
---
Total Revenues $77.8 $78.2
---
Service Revenues $52.5 $52.0
---
Operating Income
(% of Revenue)
$9.8 (13%)
$10.3 (13%)
---
Diluted EPS $0.84 $2.03
---
Non-GAAP Diluted
EPS $1.16 $1.16
---
Adjusted EBITDA $13.6 $13.6
---
Fourth Quarter 2018 Financial Summary Compared to Fourth Quarter 2017
(in millions,
except per share
amounts) Q4/2018 Q4/2017
---
Total Revenues $18.4 $18.9
---
Service Revenues $12.7 $13.4
---
Operating Income
(% of Revenue)
$2.0 (11%)
$2.3 (12%)
---
Diluted EPS $0.18 $1.35
---
Non-GAAP Diluted
EPS $0.25 $0.27
---
Adjusted EBITDA $3.0 $3.2
---
In 2018, revenues from services increased 1% as reported to $52.5 million as compared to $52.0 million. In local currency terms, revenues from services increased by 9%. Revenues from products decreased 4% as reported in 2018 to $25.2 million from $26.2 million. In local currency terms, revenues from products decreased by 3%. The currency exchange rate impact on total revenues for the year 2018 compared to the year 2017 was approximately $4.2 million.
In the fourth quarter of 2018, revenues from services decreased 5% as reported to $12.7 million as compared to $13.4 million. In local currency terms, revenues from services increased by 8%. Revenues from products increased 4% as reported to $5.7 million from $5.5 million in the same period a year ago. In local currency terms, revenues from products increased by 9%. The currency exchange rate impact on total revenues in the fourth quarter compared to a year ago was approximately $1.9 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, 5:00 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=133125.
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, adjusted EBITDA, Non-GAAP operating income, Non-GAAP net income and presentation of results in a constant currency based on the local currencies in which operations are conducted prior to giving effect to exchange rates into U.S. dollars 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 adjusted EBITDA by adding back to EBITDA Stock-based compensation expenses. 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.
Pointer calculates results on a constant currency based on the local currencies on a nominal value, without giving effect to conversion into U.S. dollar.
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 and to neutralize fluctuations in local currencies against the dollar.
EBITDA, Adjusted EBITDA, Non-GAAP operating and net income and presentation of results on a constant currency basis 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, adjusted EBITDA, Non-GAAP operating and net income and presentation of results on a constant currency basis 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 expectations for growth in 2019, and, in particular, in North America, and the impact of contracts on growth as well as continuation of certain trends, 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
December 31,
2018 December 31, 2017
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 8,528 7,375
Trade and unbilled
receivables 13,902 13,660
Other accounts receivable
and prepaid expenses 3,362 2,865
Inventories 6,432 6,551
Total current assets 32,224 30,451
LONG-TERM ASSETS:
Long-term loan to
related party 948 973
Long-term unbilled and
other accounts
receivable 1,258 1,116
Severance pay fund 3,038 3,546
Property and equipment,
net 5,915 5,848
Other intangible assets,
net 1,229 1,935
Goodwill 37,538 41,010
Deferred tax asset 7,934 9,585
Total long-term assets 57,860 64,013
Total assets 90,084 94,464
INTERIM CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
December 31, December 31,
2018 2017
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank credit and current
maturities of long-term loans 2,354 5,101
Trade payables 5,743 6,204
Deferred revenues and customer advances 785 777
Other accounts payable and accrued
expenses 8,490 9,117
Total current liabilities 17,372 21,199
---
LONG-TERM LIABILITIES:
Long-term loans from banks 2,685 5,015
Deferred taxes and other long-term
liabilities 360 838
Accrued severance pay 3,531 3,996
Total long term liabilities 6,576 9,849
---
COMMITMENTS AND CONTINGENT LIABILITIES
EQUITY:
Pointer Telocation Ltd.'s shareholders'
equity:
Share capital 6,050 5,995
Additional paid-in capital 130,309 129,076
Accumulated other comprehensive income (8,151) (2,340)
Accumulated deficit (62,278) (69,597)
Total Pointer Telocation Ltd.'s
shareholders' equity 65,930 63,134
Non-controlling interest 206 282
Total equity 66,136 63,416
Total liabilities and equity 90,084 94,464
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
---
U.S. dollars in thousands, except for share and per share information
Year ended Three months ended
December 31, December 31,
2018 2017 2018 2017
Revenues:
Products 25,243 26,182 5,688 5,457
Services 52,543 51,973 12,745 13,394
Total revenues 77,786 78,155 18,433 18,851
---
Cost of revenues:
Products 15,104 16,073 3,364 3,242
Services 21,674 21,914 5,365 5,620
Total cost of revenues 36,778 37,987 8,729 8,862
Gross profit 41,008 40,168 9,704 9,989
Operating expenses:
Research and development 4,707 4,051 1,261 1,027
Selling and marketing 14,560 14,038 3,578 3,678
General and administrative 11,169 11,275 2,769 2,812
Amortization of intangible
assets 456 463 90 124
One-time acquisition related
costs 300 32 38 32
Total operating expenses 31,192 29,859 7,736 7,673
Operating income 9,816 10,309 1,968 2,316
Financial expenses, net 1,133 1,004 277 296
Other expenses (income) 3 5 (11) 12
Income before taxes on income 8,680 9,300 1,702 2,008
Taxes on income 1,753 (7,221) 273 (9,098)
Net income 6,927 16,521 1,429 11,106
Earnings per share from
continuing operations
attributable to Pointer
Telocation Ltd.'s shareholders:
Basic net earnings per share 0.85 2.07 0.18 1.38
Diluted net earnings per share 0.84 2.03 0.18 1.35
Weighted average -Basic number
of shares 8,099,952 7,997,684 8,133,338 8,057,946
Weighted average - fully diluted
number of shares 8,279,562 8,130,566 8,297,653 8,207,997
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Year ended Three months ended
December 31, December 31,
2018 2017 2018 2017
Cash flows from operating activities:
---
Net income 6,927 16,521 1,429 11,106
Adjustments required to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 2,571 2,924 633 782
Accrued interest and exchange rate
changes of debenture and long-term
loans (20) 52 (27) 52
Accrued severance pay, net 71 93 56 (41)
Gain from sale of property and
equipment, net (101) (113) (28) (28)
Stock-based compensation 1,198 380 407 81
Decrease (increase) in trade and
unbilled receivables, net (1,121) (1,616) (1,191) 655
Decrease (increase) in other
accounts receivable and prepaid
expenses (855) (206) 184 363
Increase in inventories (56) (1,170) (1,073) (363)
Decrease (increase) in deferred
income taxes 779 (8,018) 163 (9,114)
Decrease in long-term unbilled and
other accounts receivable 220 165 319 161
Increase (decrease) in trade
payables 48 (1,597) 527 (316)
Increase (decrease) in other accounts
payable and accrued expenses (1,064) 2,285 31 362
Net cash provided by operating
activities 8,597 9,700 1,430 3,700
Cash flows from investing activities:
---
Purchase of property and equipment (2,721) (3,033) (660) (1,046)
Purchase of other intangible assets (233) (233)
Proceeds from sale of property and
equipment 101 114 29 28
Net cash used in investing activities (2,620) (3,152) (631) (1,251)
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Year ended Three months ended
December 31, December 31,
2018 2017 2018 2017
Cash flows from financing
activities:
---
Repayment of long-term
loans from banks (5,078) (4,875) (1,268) (1,506)
Proceeds from issuance of
shares and exercise of
options, net of issuance
costs 89 395 9 7
Short-term bank credit,
net 32 (231) 74 74
Net cash used in financing
activities (4,957) (4,711) (1,185) (1,425)
Effect of exchange rate on
cash and cash equivalents 133 (528) 599 (653)
Increase in cash and cash
equivalents 1,153 1,309 213 371
Cash and cash equivalents
at the beginning of the
period 7,375 6,066 8,315 7,004
Cash and cash equivalents
at the end of the period 8,528 7,375 8,528 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:
Year ended Three months ended
December 31, December 31,
2018 2017 2018 2017
GAAP gross profit 41,008 40,168 9,704 9,989
Stock-based compensation expenses 104 3 39 1
Non-GAAP gross profit 41,112 40,171 9,743 9,990
GAAP operating income 9,816 10,309 1,968 2,316
Stock-based compensation expenses 1,198 380 407 81
Amortization and impairment of long lived assets 456 463 90 124
Other expenses of retirement costs 125
Acquisition related one-time costs 300 154 38 154
Non-GAAP operating income 11,770 11,431 2,503 2,675
GAAP net income 6,927 16,521 1,429 11,106
Stock-based compensation expenses 1,198 380 407 81
Amortization and impairment of long lived assets 456 463 90 124
Other expenses of retirement costs 125
Non cash tax expenses 759 (8,213) 147 (9,243)
Acquisition related one-time costs 300 154 38 154
Non-GAAP net income 9,640 9,430 2,111 2,222
Non-GAAP net income per share from continuing
operations - Diluted 1.16 1.16 0.25 0.27
Non-GAAP weighted average number of shares -
Diluted* 8,279,562 8,297,653
8,130,566
8,207,997
* 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
and Adjusted
EBITDA
U.S. dollars in thousands
Year ended Three months ended
De
cember 31,
December 31,
2018 2017 2018 2017
GAAP Net income as reported: 6,927 16,521 1,429 11,106
Financial expenses, net 1,133 1,004 277 296
Tax on income 1,753 (7,221) 273 (9,098)
Depreciation and amortization of goodwill and
intangible assets 2,571 2,924 782
633
EBITDA 12,384 13,228 2,612 3,086
Stock-based compensation expenses 1,198 380 407 81
Adjusted EBITDA 13,582 13,608 3,019 3,167
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.
