Pointer Telocation (PNTR) Tops Q4 EPS by 3c, Revenues Miss

Pointer Telocation (NASDAQ: PNTR) reported Q4 EPS of $0.25, $0.03 better than the analyst estimate of $0.22. Revenue for the quarter came in at $18.4 million versus the consensus estimate of $19.33 million.

• 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."

For earnings history and earnings-related data on Pointer Telocation (PNTR) click here.

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