Pointer Telocation Reports Second Quarter 2019 Financial Results
ROSH HAAYIN, Israel, Aug. 15, 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 second quarter and six months ended June 30, 2019.
Financial Highlights for Second Quarter of 2019 Compared to Second Quarter of 2018
-- Record revenues of $21.4 million, up 9% as reported and up 16% on a
constant currency basis
-- Service revenues of $12.5 million, down 5% as reported and up 5% on a
constant currency basis
-- Operating income of $1.8 million (8% of revenue), down from $2.8 million
for the prior-year period
-- Net income of $1.1 million, down from $1.9 million for the prior-year
period
-- Adjusted EBITDA of $3.3 million, down from $3.6 million for the
prior-year period
-- Cash net of debt totaled to $2.7 million at June 30, 2019
-- Total subscribers reached 282,000, an increase of 4% year-over-year
Management Comment
David Mahlab, Pointer's Chief Executive Officer, commented:
"We are very excited to report record revenue of $21.4 million in the second quarter, driven by significant product revenue in North America. We are seeing increasing traction in this key expansion market as we benefit from synergies with our primary partner, ID Systems, and we expect to accelerate our combined efforts there as we fully integrate our business and operations, post-acquisition. We believe we are on track to close this transaction in October 2019 after the parties extended the date after which each party can terminate the merger agreement without cause until the end of October.
Meanwhile in other major markets we saw strong growth in Brazil in the second quarter based on wins we announced earlier this year, and we expect to continue this momentum in Brazil and other Latin America markets.
During the fourth quarter of 2018 and the first quarter of 2019, we significantly reduced services to low margin customers, cutting approximately 15,000 low revenue subscribers in total, in order to enhance our long-term profitability. In the second quarter of 2019, we executed our plans and returned to subscriber growth of about 4% quarter-over-quarter. We expect to continued momentum in our service subscriber growth going forward.
For the remainder of 2019, we continue to expect double-digit growth in our overall business comparing same period in 2018, with accelerating growth on our top line and continuing investment in new products and solutions, particularly for the North American market."
Second Quarter 2019 Financial Summary Compared to Second Quarter 2018
(in millions, except per share amounts) June 30, 2019
June 30, 2018
--- ---
Total Revenues $21.4 $19.7
---
Service Revenues $12.5 $13.2
---
Operating Income (% of Revenue)
$1.8 (8%)
$2.8 (14%)
--- ---
Diluted Earnings per Share (EPS) $0.13 $0.23
---
Non-GAAP Diluted EPS $0.22 $0.30
---
Net Income $1.1 $1.9
---
EBITDA $2.9 $3.4
---
First Half 2019 Financial Summary Compared to First Half 2018
(in millions, except per share amounts) June 30, 2019 June 30, 2018
--- ---
Total Revenues $39.7 $40.6
---
Service Revenues $24.9 $27.0
---
Operating Income (% of Revenue)
$3.0 (8%)
$5.3 (13%)
--- ---
Diluted Earnings per Share (EPS) $0.20 $0.44
---
Non-GAAP Diluted EPS $0.42 $0.60
---
Net Income $1.7 $3.7
---
EBITDA $4.8 $6.7
---
Revenues from services decreased 5% to $12.5 million as compared to $13.2 million in the second quarter of 2018. In constant currency terms, revenues from services increased by 5%. Revenues from products increased by 36% as reported in the second quarter of 2019 to $8.9 million from $6.6 million in the second quarter of 2018. In constant currency terms, revenues from products increased by 37%. The currency exchange rate impact on total revenues for the second quarter of 2019 compared to the second quarter of 2018 was approximately $1.5 million. The currency exchange rate impact on operating income for the second quarter of 2019 compared to the second quarter of 2018 was immaterial.
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.
Reconciliation between results on a GAAP and Non-GAAP basis
A 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 and acquisition related costs. 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 and losses and acquisition related 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 and acquisition related 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 increasing traction in the North America market, potential acceleration of efforts with I.D. Systems, full integration of the companies' businesses and timing of closing of the acquisition transaction with I.D. Systems, continued positive momentum in Brazil, other Latin America markets and in the number of service subscribers and rates of top and bottom line growth for the remainder of 2019 as well as continued investment in products and solutions, 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,
2019 2018
Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 6,698 8,528
Trade and unbilled receivables 17,688 13,902
Other accounts receivable and prepaid expenses 5,484 3,362
Inventories 7,668 6,432
Total current assets 37,538 32,224
LONG-TERM ASSETS:
Long-term loan to related party 1,022 948
Long-term unbilled and other accounts receivable 940 1,258
Severance pay fund 3,382 3,038
Property and equipment, net 6,236 5,915
Other intangible assets, net 1,073 1,229
Goodwill 39,044 37,538
Deferred tax asset 7,856 7,934
Operating lease right-of-use asset 3,280
Total long-term assets 62,833 57,860
Total assets 100,371 90,084
INTERIM CONSOLIDATED BALANCE SHEETS
---
U.S. dollars in thousands
June 30,
December 31,
2019 2018
Unaudited
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank credit and current maturities of long-term loans 2,068 2,354
Trade payables 8,605 5,743
Deferred revenues and customer advances 769 785
Other accounts payable and accrued expenses 8,943 8,490
Total current liabilities 20,385 17,372
---
LONG-TERM LIABILITIES:
Long-term loans from banks 1,933 2,685
Deferred taxes and other long-term liabilities 343 360
Accrued severance pay 3,751 3,531
Operating lease liability 3,300
Total long term liabilities 9,327 6,576
---
COMMITMENTS AND CONTINGENT LIABILITIES
EQUITY:
Pointer Telocation Ltd.'s shareholders' equity:
Share capital 6,059 6,050
Additional paid-in capital 130,802 130,309
Accumulated other comprehensive income (5,762) (8,151)
Accumulated deficit (60,547) (62,278)
Total Pointer Telocation Ltd.'s shareholders' equity 70,552 65,930
Non-controlling interest 107 206
Total equity 70,659 66,136
Total liabilities and equity 100,371 90,084
INTERIM CONSOLIDATED STATEMENT 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,
2019 2018 2019 2018 2018
Unaudited Unaudited
Revenues:
Products 14,810 13,637 8,918 6,578 25,243
Services 24,891 26,986 12,525 13,162 52,543
Total revenues 39,701 40,623 21,443 19,740 77,786
---
Cost of revenues:
Products 9,892 8,188 6,109 3,963 15,104
Services 10,727 11,148 5,511 5,438 21,674
Total cost of revenues 20,619 19,336 11,620 9,401 36,778
Gross profit 19,082 21,287 9,823 10,339 41,008
Operating expenses:
Research and development 2,641 2,359 1,370 1,122 4,707
Selling and marketing 7,513 7,545 3,855 3,677 14,560
General and administrative 5,038 5,548 2,452 2,661 11,169
Amortization of intangible assets 173 248 78 121 456
One-time acquisition related costs 711 262 260 300
Total operating expenses 16,076 15,962 8,015 7,581 31,192
Operating income 3,006 5,325 1,808 2,758 9,816
Financial expenses, net 365 666 145 332 1,133
Other expenses (income) (8) 15 (8) 3
Income before taxes on income 2,649 4,644 1,671 2,426 8,680
Taxes on income 973 950 596 501 1,753
Net income 1,676 3,694 1,075 1,925 6,927
Earnings per share from continuing
operations attributable to Pointer
Telocation Ltd.'s shareholders:
Basic net earnings per share 0.21 0.46 0.13 0.24 0.85
Diluted net earnings per share 0.20 0.44 0.13 0.23 0.84
Weighted average -Basic number of shares 8,162,950 8,066,698 8,188,475 8,073,665 8,099,952
Weighted average - fully diluted number of 8,360,140 8,257,968 8,393,890 8,221,373 8,279,562
shares
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
---
U.S. dollars in thousands
Six months ended Three months ended
Year ended
June 30, June 30, December 31,
2019 2018 2019 2018 2018
Unaudited Unaudited
Cash flows from operating activities:
---
Net income 1,676 3,694 1,075 1,925 6,927
Adjustments required to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 1,746 1,345 1,068 627 2,571
Accrued interest and exchange rate changes of (99) 25 (37) 24 (20)
debenture and long-term loans
Accrued severance pay, net (142) 46 (27) (32) 71
Gain from sale of property and equipment, net (36) (49) (20) (22) (101)
Stock-based compensation 471 386 125 244 1,198
Decrease (increase) in trade and unbilled (3,310) (788) (2,517) 200 (1,121)
receivables, net
Increase in other accounts (2,214) (1,370) (1,362) (749) (855)
receivable and prepaid expenses
Decrease (increase) in inventories (1,359) 751 (557) 541 (56)
Decrease (increase) in deferred income taxes 385 341 266 186 779
Decrease (increase) in long-term unbilled and 381 (202) (173) (360) 220
other accounts receivable
Increase (decrease) in trade payables 2,496 247 3,292 358 48
Increase (decrease) in other accounts payable 1,117 (382) 250 (1,214) (1,064)
and accrued expenses
Net cash provided by operating activities 1,112 4,044 1,383 1,728 8,597
Cash flows from investing activities:
---
Purchase of property and equipment (1,507) (1,633) (977) (674) (2,721)
Proceeds from sale of property and equipment 36 49 20 22 101
Net cash used in investing activities (1,471) (1,584) (957) (652) (2,620)
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
---
U.S. dollars in thousands
Year ended
December 31,
Six months ended Three months ended
June 30, June 30,
2019 2018 2019 2018 2018
Unaudited Unaudited
Cash flows from financing activities:
---
Repayment of long-term loans from banks (1,585) (2,645) (367) (1,294) (5,078)
Proceeds from issuance of shares and exercise of 20 80 20 76 89
options, net of issuance costs
Short-term bank credit, net 546 79 32 21 32
Net cash used in financing activities (1,019) (2,486) (315) (1,197) (4,957)
Effect of exchange rate on cash and cash equivalents (453) (181) (288) (477) 133
Decrease in cash and cash equivalents (1,831) (207) (177) (598) 1,153
Cash and cash equivalents at the beginning of the 8,529 7,375 6,875 7,766 7,375
period
Cash and cash equivalents at the end of the period 6,698 7,168 6,698 7,168 8,528
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,
2019 2018 2019 2018 2018
GAAP gross profit 19,082 21,287 9,823 10,339 41,008
Stock-based compensation expenses 61 33 27 24 104
Non-GAAP gross profit 19,143 21,320 9,850 10,363 41,112
GAAP operating income 3,006 5,325 1,808 2,758 9,816
Stock-based compensation expenses 471 386 125 244 1,198
Amortization and impairment of long lived assets 173 248 78 121 456
Acquisition related one-time costs 711 262 260 300
Non-GAAP operating income 4,361 6,221 2,271 3,123 11,770
GAAP net income 1,676 3,694 1,075 1,925 6,927
Stock-based compensation expenses 471 386 125 244 1,198
Amortization and impairment of long lived assets 173 248 78 121 456
Non cash tax expenses 449 375 283 204 759
Acquisition related one-time costs 711 262 260 300
Non-GAAP net income 3,480 4,965 1,821 2,494 9,640
Non-GAAP net income per share from continuing 0.42 0.60 0.22 0.30 1.16
operations - Diluted
Non-GAAP weighted average number of shares - 8,360,140 8,257,968 8,393,890 8,221,373 8,279,562
Diluted*
* 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 Three months ended
Year ended
June 30, June 30, December 31,
2019 2018 2019 2018 2018
GAAP Net income as reported: 1,676 3,694 1,075 1,925 6,927
Financial expenses, net 365 666 145 332 1,133
Tax on income 973 950 596 501 1,753
Depreciation, amortization and impairment of 1,746 1,345 1,068 627 2,571
goodwill and intangible assets
EBITDA 4,760 6,655 2,884 3,385 12,384
Stock-based compensation expenses 471 386 125 244 1,198
Acquisition related costs 711 262 260 300
Adjusted EBITDA 5,942 7,303 3,269 3,629 13,882
Company contact:
Yaniv Dorani, CFO
Tel: +972-3-5723111
E-mail: yanivd@pointer.com
Investor Relations Contact at Hayden IR, LLC:
Brett Maas
Tel: 646-536-7331
E-mail: brett@haydenir.com
Dave Fore
Tel: 206-395-2711
E-mail: dave@haydenir.com
View original content to download multimedia:http://www.prnewswire.com/news-releases/pointer-telocation-reports-second-quarter-2019-financial-results-300902412.html
SOURCE Pointer Telocation Ltd
